Global GDP to fall by 4.5% this year- Moody’s | Daily News


Global GDP to fall by 4.5% this year- Moody’s

Mark Zand
Mark Zand

Real global GDP will fall by 4.5% this year as a result of COVID-19 according to the Moody’s Analytics baseline economic forecast.

“Our base case for the US suggests that it will take until mid-decade for the economy to return to full-employment. Mark Zandi, Chief Economist at Moody’s Analytics, describes the outlook in a new paper, handicapping the Paths for the Pandemic Economy.”

“COVID-19 has caused massive damage to the global economy. Quickly reopening economies will boost growth by unleashing pent-up demand, but will also raise the specter of a re-intensification of COVID-19 and another economic downdraft, which could lead to a worldwide depression. We construct our economic forecasts to help market participants navigate this daunting uncertainty and make better decisions,” said Zandi.

The Moody’s Analytics baseline economic forecast represents our view of the most likely trajectory for the global economy. The baseline forecast is part of a set of 12 forecast scenarios, updated monthly, that project alternative economic paths for more than 100 countries as well as sub-national regions in major markets. “Given the unprecedented uncertainty around the path of the virus and the policy response, we maintain several alternative scenarios that cover a range of possible outcomes to help users assess the impact on their businesses and portfolios,” added Zandi. “Our global team of economists is dedicated to developing scenarios that account for current conditions and the various risks facing economies that may impact their outlook.”

Forecasts are based on the Moody’s Analytics Global Macroeconomic Model, which balances economic theory and empirical behavior and is fully documented and validated.

In addition to the probability-weighted monthly scenarios, Moody’s Analytics produces ad hoc thematic economic scenarios that forecast potential outcomes in the event of significant policy shifts or changes to economic fundamentals. Our new Global Debt Crisis thematic scenario examines the consequences of high and rising sovereign debt in the event that global growth slows and governments in both developed and emerging markets are unable to address their high and rising debt loads. Moody’s Analytics provides financial intelligence and analytical tools to help business leaders make better, faster decisions.

‘‘The global economic outlook also depends on how the powerful headwinds and tailwinds currently buffeting business and consumer demand net out.They include the loss of jobs and wealth and the fragile state of the collective psyche. Sales are weak, and pricing remains soft with businesses unable to raise prices for their goods and services.Hiring and investment are moribund. North American businesses are the most downbeat respondents, followed by Latin American and European businesses. Asian businesses are the least worried.’’

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