Coronavirus and the trade war, the challenges of the global economy in 2020

Euromonitor has cut its growth forecasts for the world’s economy by 0.1 to 0.3 points by 2020 due to the outbreak of the coronavirus.

The world economy is suffering. Growth of 1.4% for the advanced economies and 4.2% for the emerging countries. According to Euromonitor, these are the forecasts for the world economy in 2020, which is marked by three risk factors: the trade war, the fall in consumption and the coronavirus.

The outbreak of the epidemic has become an unexpected player on the gameboard of the global economy. Although according to Euromonitor, China is the country most at risk from the situation, the report warns that if the outbreak of the epidemic continues to spread across the globe, the risk of a global recession, burdened by reduced consumption and falling business investment, will increase.

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China’s GDP will grow by up to 5% in 2020

Euromonitor expected the Chinese economy to grow by up to 6% in 2020, but following the outbreak of the epidemic, the country’s Gross Domestic Product (GDP) is estimated to grow by 5% during the year. The paralysis of production, the closure of establishments and the fall in consumption are the main factors that will weigh on the Chinese economy.

At the same time, although the entry into force of the first phase of the agreement between China and the U.S. has alleviated the uncertainty about the escalation of the trade war between the two powers, the international consultant said it will continue to have repercussions around the world. For the U.S., the consulting firm estimated that GDP will advance by 1.7% in 2020.

In the Eurozone countries, GDP is expected to slow down by 0.8% to 1.3% in 2020. While consumer spending and the service sector will be on the rise, falling business investment, declining exports and slowing production are some of the factors that will limit growth in the region.

Japanese economy to suffer from the coronavirus outbreak in 2020

In Japan, the 3d largest country in the world by nominal GDP, Euromonitor expects the economy to grow by 0.3% in2020. The change in forecast is driven by Prime Minister Shinzo Abe’s announcement of a $1 billion fiscal stimulus package to be implemented by March 2021.

In the first quarter of the year, the Japanese economy will suffer from the outbreak of the coronavirus. However, Euromonitor estimates that this situation is temporary and will cease to have repercussions from the second half of the year.

For India, Euromonitor’s growth forecast is for 5.8% growth in 2020, which is below the initial forecast of 6.4%. The fall in consumption and investment have been the two main factors negatively affecting the country’s economy.

The progress of the Russian economy, estimated at between 1.6% and 1.7% in 2020, will depend mainly on the implementation of national infrastructures planned by the government.

According to Euromonitor, the evolution of Brazil’s GDP will be more positive in 2020 thanks to the favorable market condition and the implementation of monetary policy in the country. The consultancy firm’s growth forecasts for the Latin American country is of 2.1% in 2020.

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(Featured image by Brett Zeck via Unsplash)

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