Economic Research: COVID-19 Macroeconomic Update: The Global Recession Is Here And Now

China. Although the health situation there has stabilized, much of the economic damage has already been done. We now project growth of 2.7%-3.2% for 2020, with a flat second quarter and a recovery starting in the second half. Chinese authorities don't appear to be planning a big fiscal stimulus, though targeting spending will continue, and the People's Bank of China will intervene to keep liquidity flowing. Eurozone. The virus continues to spread, and an increasing portion of the Eurozone population remains at or near lockdown. Tourism and investment have been the hardest-hit areas so far. We now expect the eurozone economy to contract 0.5%-1.0% this year. COVID-19 will affect first-quarter data (when we expect contraction) somewhat, but we believe the

...- As the coronavirus pandemic escalates and growth heads sharply lower against a backdrop of volatile markets and growing credit stress, we now forecast a global recession this year, with 2020 GDP rising just 1.0%-1.5%. The risks remain firmly on the downside. - The initial data from China suggests that its economy was hit far harder than projected, though a tentative stabilization has begun. Europe and the U.S. are following a similar path, as increasing restrictions on person-to-person contacts presage a demand collapse that will take activity sharply lower in the second quarter before a recovery begins later in the year. - Central banks have swung into action and are undertaking some combination of sharply reduced policy rates, resumed assets purchase and liquidity injections. Fiscal authorities have generally lagged but have begun to loosen the purse strings; we suspect that larger and more targeted spending to the most affected groups is forthcoming. Since our last update, which was...

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