Moody’s Investor Service has recently said that economies of G20 countries may witness a contraction in the first half of 2020.
Moody’s latest forecast comes at a time when world’s largest advanced and emerging economies are having a rough time due to the coronavirus pandemic. These are the nations that represent over two-thirds of the world population. India also is a member of the group.
Apart from India, other members include the US, the United Kingdom, Argentina, Australia, Brazil, Canada, China, France, Germany, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey and the European Union.
The report noted that the economic effect of the pandemic includes impact on demand, supply disruption and shock to the financial markets.
The Moody’s report said, “The global economy will experience an unprecedented shock in the first half of 2020.”
Further, falling consumer demand and production disruptions from lockdowns and restrictions on movement will likely lead to a sharp fall in business activity in the second quarter, it said.
“The nascent recovery in Germany is tapering off and will likely reverse. Slow improvement in domestic consumer demand and disruptions in the rest of the world will also temper the pace of China’s recovery.”
The report also noted that employment conditions in developed nations like the US and France are deteriorating, while it is stabilising in China.
Further, Moody’s Financial Conditions Indicator points to a continued tightening of financial conditions in the US. It also indicated that trade is weakening across regions.
“Disruption in trade flows and supply chains will amplify the negative impact on the global economy,” it said.
The report further points at the sectors that have suffered the most due to the coronavirus crisis. These primarily include aviation, hospitality, travel, auto, commodity exporters and financial institutions.
On the other hand, remote communications, online media and retail, vaccine developers are among the sectors which have witnessed a positive impact of the situation.
Moody’s last month had predicted that G20 countries are likely to suffer a recession in 2020, because of the pandemic. It had also estimated that G20’s overall gross domestic product would contract by 0.5 per cent, with the US economy shrinking by 2 per cent and the eurozone by 2.2 per cent.