We expect the global recession to be the deepest one in our lifetime and we won't be back to normal any time soon. Global GDP is projected to contract 3.8%, more than double the -1.8% drop in 2009. Economic activities are likely to remain severely constrained throughout 2Q, even assuming new infections in Europe and the US to peak in May (see chart a). We expect the hit to economic activity to be the strongest in 2Q. Sharply rising unemployment and permanent income losses will limit consumption growth and thus weighing on economic growth in 2H and beyond.
We expect a deeper and sharper global recession with GDP contracting by 3.8%.
We expect real GDP to fall 6.4% in the US, and 7.1% in the Euro area in 2020.
Growth will bounce back but output lost will not be recovered. Rising unemployment and permanent income losses will be weighing on growth outlook. Interest rates will remain low and central banks are likely to cap yield increases to accommodate the massive fiscal stimulus.
Financial repression on the rise with central banking capping yield increases, if needed.
Downside risks continue to outweigh upside risks.
We are more positive for the economic recovery in the US relative to Europe and see China leading the way.