Global economy to contract by 6% in 2020 due to Covid-19 pandemic, according to leading macroeconomic influencers

11 June 2020 (Last Updated June 11th, 2020 07:15)

Global economy to contract by 6% in 2020 due to Covid-19 pandemic, according to leading macroeconomic influencers

The Covid-19 pandemic has led to widespread unemployment and potential bankruptcies of businesses and companies across the world. The economic downturn caused by the pandemic is considered to be one of the biggest in the past century. Developed nations are expected to feel the impact of the pandemic for a long time posting a slow economic recovery.

Stephany Griffith-Jones

Stephany Griffith-Jones, an economist, shared an article on how the global economy is expected to suffer the worst recession in a century. The article is based on a report from the Organisation for Economic Cooperation and Development (OECD).

The article notes that the global economy is expected to contract by 6% due to the pandemic and by 7.6% if there is a second wave of infections. The report from OECD notes that this is the worst contraction in 100 years.

Linda Yueh

Linda Yueh, economist at University of Oxford, shared an article on how the UK economy is expected to suffer the most damage among all other developed nations in the world, according to a report by the OECD.

The OECD report notes that the UK economy is expected to contract by 11.5% in 2020. If a second lockdown is imposed, the economy may contract at a higher rate of 14%. The economies of other countries in Europe are projected to contract at a lower rate compared to the UK. The economy of France is projected to contract by 11.4%, Italy by 11.3% and Spain by 11.1%.

Howard Archer

Howard Archer, Chief Economic Advisor to EY ITEM Club, shared an article on how the European Central Bank to preparing to develop a scheme to deal with the billions of Euros in unpaid loans due to the Covid-19 pandemic.

The scheme is aimed at protecting commercial banks from any fallout from the pandemic as widespread unemployment will make it difficult for people and businesses to repay their loans.

Prof. Steve Hanke

Prof. Steve Hanke, applied economist at Johns Hopkins, shared an article on the record number of foreign deposits from bank accounts in Hong Kong to banks in Singapore during the pandemic. In April, the deposits from non-residents increased by 44% to $44.37bn.

The political stability and AAA credit rating of Singapore makes it a preferred destination for capital flows. The political unrest in Hong Kong has led to an exit in capital from the city, which has been further compounded by the pandemic.