2020-03-16_Bloomberg_Businessweek_Asia_Edition

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 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.
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