Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

World economic prospects darken, rebound delayed: Reuters poll

EconomyMay 26, 2020 08:15PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

By Shrutee Sarkar

BENGALURU (Reuters) - Economic prospects for the developed world this year have darkened again in the past month as the coronavirus pandemic has rolled from Asia to the Americas, with a V-shaped sharp recovery expected by less than one-fifth of economists polled by Reuters.

With many countries starting to ease lockdown restrictions imposed to stop the spread of the virus, which has infected over 5.5 million people globally, equity markets are rallying on hopes for a swift return to health and prosperity.

But the trough in economic activity will be deeper and the rebound is likely to take longer than predicted just a short time ago, in part because the pandemic is spreading across the globe in stages and arriving in countries at different times.

Reuters polls of more than 250 economists taken over the past few weeks showed recessions in most major economies would be deeper this year than previously predicted.

"In many ways the outlook for the global economy resembles an obstacle course. In the first step, the economy falls into a big hole, starting in China in Q1, most of the rest of the world in Q2 and extending into Q3 in some emerging markets," said Ethan Harris, head of global economics research at BofA.

"The second step is trying to reopen the economy without re-igniting the disease. The third step is dealing with the lagged impact of confidence on durable goods spending, the risks of a premature maxing out of fiscal and monetary stimulus, and a trade and tech war waiting in the wings."

Almost three-quarters of economists, 69 of 94, who answered an additional question said the recovery would be either U-shaped, with a prolonged trough, or like a tick mark where the speed of the recovery is not as quick as the drop-off.

Only 15 respondents predicted a strong, V-shaped recovery. The others said it would be W-shaped, where a vigorous rebound results in another sharp slump, or L-shaped where the economy flatlines after the downturn.

Graphic - Reuters Poll: Expected shape of the global economic recovery - https://fingfx.thomsonreuters.com/gfx/polling/jznvnbeyyvl/Global%20economic%20recovery.PNG

The world economy is now forecast to shrink 3.2% this year, compared to a 2.0% contraction predicted in the April 23 Reuters poll and -1.2% forecast in an April 3 poll.

No economist polled expected growth in 2020, with forecasts in a -0.3% to -6.7% range. The outlook under a worst-case scenario was -6.0%, with those in a -3.0% to -15.0% range.

Forecasts for global economic growth tended to range from 2.3% to 3.6% before the pandemic struck.

Graphic - Reuters Poll: Global economic outlook - https://fingfx.thomsonreuters.com/gfx/polling/ygdpzqqrrvw/Global%20economic%20outlook.PNG

But the global economy was expected to grow 5.4% next year, according to the latest poll, faster than the 4.5% predicted last month.

Forecasts for the U.S., the euro zone, Britain and Japan were lowered for this year from previous polls and expectations for 2021 growth were modest given the historic downturn as governments shut down their economies to varying degrees.

(For a graphic on the shape of things to come in the U.S.: https://graphics.reuters.com/HEALTH-CORONAVIRUS/ECONOMICS/yxmpjozjyvr/index.html)

That was despite massive monetary policy easing by most central banks and unprecedented fiscal stimulus by many major countries.

(For a graphic on Global economic response to COVID-19: https://graphics.reuters.com/HEALTH-CORONAVIRUS/ECONOMY/jbyprjmwepe/index.html)

A little more than half of economists, 38 of 69, said the global economic policy response to the pandemic - both fiscal and monetary - was "about right". While 29 respondents said "not enough" only two economists said it was "too much."

"There has been an unprecedented amount of policy easing so far. It may be that the current package of measures will prove insufficient, but if more needs to be done then policymakers can always do so," said Peter Dixon at Commerzbank (DE:CBKG).

"Given that we are operating in unprecedented territory, it is difficult to judge how much support is required so we should give policymakers credit for what they have done so far."

World economic prospects darken, rebound delayed: Reuters poll
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email