THE pandemic will wipe an eye-watering $6.7 trillion – or £5 trillion – from the global economy in 2020, new analysis suggests.
The forecast fall in global GDP – down 5.2% from $89.94 trillion to $83.19 trillion – is equivalent to the annual economic output of Germany and France combined.
It would represent the deepest recession since World War Two, nearly three times as severe as the one caused by the 2008 credit crunch.
The study, compiled by online platform IG, found that advanced economies such as the US, UK and EU were most severely hit, with growth set to fall by an average of 7% this year. Emerging markets will suffer a 2.5% drop.
It estimates 92% of countries will have been plunged into recession, the highest since the world was laid low by the smallpox pandemic of the 1870s.
The analysis suggests that 346 billion working hours were lost globally in the first half of 2020, which is equivalent to 555 million full-time jobs worldwide.
Meanwhile, the impact on equity markets has seen catastrophic falls across all major indices. The S&P 500, a benchmark of US companies, suffered one of its worst collapses on record over the first 100 days of the crisis.
It surpassed crashes triggered by Black Monday, the burst of the dot-com bubble and the Great Recession. The FTSE100, Germany 30 and HS50 endured similar falls.
Leading economists warned there will be many bumps in the road as the world sets out on the path to recovery.
Dr Gerard Lyons, chief economic strategist at Netwealth, said that in the UK: “The economy will recover, and in terms of output it will be a good recovery, but the big issue is what happens with jobs. Unemployment may not get back to pre-crisis levels for a few years.”
Steve Hanke, professor of applied economics at the John Hopkins University in Baltimore, said he was anticipating a V-shaped recovery as world economies reopen but said a return to pre-virus GDP growth is unlikely before late 2022.
He said: “Things will look like they’re getting better rapidly, but then all the problems begin. The damage that’s been done is massive, all the supply chains that have been disrupted are going to be hard to put back together again. There will be all kinds of bumps in the road.” (ES)
