2020-03-16_Bloomberg_Businessweek_Asia_Edition

 COVID-19 / ECONOMY Bloomberg Businessweek March 16, 2020

7

6%

The coronavirus threatens to bring the world economy to a standstill. The fallout could include recessions in
the U.S., euro area, and Japan; the slowest growth on record in China; and a total $2.7 trillion in lost output—
equivalent to the gross domestic product of the U.K. That’s the most extreme of four scenarios developed by
Bloomberg Economics. The outcome many had in mind a month ago—with a major outbreak confined to China
and other countries suffering limited effects—is rapidly becoming too optimistic. The chances of the worst-case
scenario—with all major economies suffering a significant shock—are rising by the day. The graphic below shows
how they would fare under each scenario. —Maeva Cousin, Jamie Rush, and Tom Orlik

Hong Kong

Russia

Indonesia

South Korea

India

Turkey

France

Germany

Italy

Spain

Brazil

U.K.

Mexico

Australia

Canada

Japan

Saudi Arabia

China

U.S.

-6 -4 -2 0 2 4

Baseline 2020 GDP growth forecast Percentage-point change from baseline

CALCULATIONS OF SUPPLY CHAIN LINKAGES, AND A LARGE-SCALE MODEL OF THE GLOBAL ECONOMY. DATA: BLOOMBERG ECONOMICS, NIGEM, OECD ICSCENARIOS ARE BASED ON BLOOMBERG ECONOMICS’ ESTIMATE OF THE SLOWDOWN EXPERIENCED IN CHINA, THE CASE COUNT IN OTHER COUNTRIES, IO

Global 2020 GDP

growth forecast 

Scenario 1

China shock

2.9%

Scenario 2

More outbreaks

2.3%

Scenario 3

Widespread contagion

1.2%

Scenario 4

Global pandemic

0.1%

In Scenario 2, the

euro area and

Japan are sent into

recession.

Australia faces its

first recession in

29 years as the virus

outbreak hits demand

from China, its

biggest trade partner.

For Hong Kong, the

impact of the virus will

compound the blow

from 2019’s trade war

and protests, pushing

the economy into a

record contraction.

In Scenario 4, China’s

growth falls to the

lowest level since

the beginning of the

reform era.

In Scenario 3, U.S. growth

drops to 0.5%, enough to

drive unemployment higher in

what is an election year.