“Bank of America” (BofA) presented a forecast for the state of the global economy for 2020. According to bank specialists, the current year will be the worst for the world economy for the first time since 2009, reports bankofamerica.com.
Global gross domestic product growth is forecast to slow to 2.8 percent in 2020, which BofA Global Research estimates will be below 3 percent in 2009 for the first time.
The main reason is the outbreak of the coronavirus, which has led to a decline in economic activity in China as the disease spreads widely.
BofA economists said the U.S.-China trade war, political uncertainty and weakness in Japan and parts of South America were also part of a “big spillover effect” weighing on output.
“Continued disruptions in China should damage the global supply chain. Weak tourist flows will also be a big obstacle for Asia. In many countries, outbreak restrictions are possible, as in Italy, which will lead to increased quarantines and a drop in confidence,” said BofA economist Aditya Bhaven.
Amid the slowdown, BofA also sees China growing at 5.2 percent in 2020, up from 5.9 percent in 2019.
Global GDP excluding China is expected to grow just 2.2 percent, also the slowest since the recession.
The company’s economists do not believe that the coronavirus will turn into a global pandemic. Instead, they see it as part of a broader slowdown driven by multiple factors that could be exacerbated by this year’s U.S. presidential election and the possibility of continued trade tensions with China.
“The upcoming presidential election adds another level of complexity, as US trade policy is likely to change significantly under a Democratic president,” Bhave wrote.
He noted that such “uncertainties” usually have “delayed, large and long-lasting” consequences.
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