Economists polled by Reuters believe that the global recession has already started, reports published on Friday revealed. The COVID-19 virus that has spread globally has sparked some of the deepest emergency stimulus measures in history, and the measures have been implemented worldwide. Panic selling has plagued the markets, sending stock prices broadly lower, gold prices fluctuating, and bond prices to new lows. 31 of the 41 economists polled by Reuters commented that the past decade of expansion had ended.
“There is no longer doubt that the longest global expansion on record will end this quarter. The key outlook issue now is gauging the depth and the duration of the 2020 recession,” Bruce Kasman, head of global economic research at JP Morgan, was quoted as saying.
Bank of America analysts joined the declaration, sending a note to clients on Thursday that read “We are officially declaring that the economy has fallen into a recession…joining the rest of the world, and it is a deep plunge….Jobs will be lost, wealth will be destroyed, and confidence depressed.”
Analysts have been trimming their growth outlooks in the past few weeks and have even planned for negative growth. The global economy was originally expected to grow 1.6 percent in 2020, but global GDP forecasts are now as low as -2 percent according to some analysts. As analysts continue to cut expectations, they expect to continue paring back as the situation develops and more deaths and closures are announced.
CNBC analysts have also predicted a massive shift in the global supply chain as a result of the current pandemic. For example, while China has long been a critical cog in the global supply chain, many companies are starting to look for local options due to the closures in China and disruptions in shipping that are likely to cause problems even when Chinese factories are fully back to business. There have also been factory disruptions in South Korea and Japan. Though factories in China have begun to reopen, it is likely to take months for them to return to full force, at which point the global economy may not be able to support this production due to the recent spike in unemployment numbers.
The U.S. dollar has been strengthening in recent days but faced steep losses during Friday’s Asian trading session. The greenback slid against the yen, falling 0.732 percent to 109.88. The British pound surged against the dollar, trading up 3.37 percent to $1.187, while the euro gained 0.93 percent to trade at $1.079. The greenback eased 2.157 percent against the Canadian dollar as of 4:51 p.m. HK/SIN, to trade at $1.42, while the Aussie surged 3.57 percent against the greenback, to trade at $0.595.