Economic data from the first quarter of 2020 has provided a foretaste of the impact the pandemic is set to have on global economic activity.
In the UK, output fell by 2% across the first three months of 2020, with the economy shrinking by a massive 5.8% in March alone. An even larger decline was seen across the 19-country Eurozone, with output falling by a record 3.8% in the January– March period. Italy and France plunged into recession, with quarterly contractions of 4.7% and 5.8% respectively, while the German economy also slipped into recession, contracting by 2.2% for the quarter.
US and Japan economies shrinking
The US economy shrank at an annualised rate of 5% in the first quarter and a worse outcome is expected for the April-June quarter. The Japanese economy, already struggling following a sales tax hike last October, also fell, contracting at an annualised rate of 3.4% in the opening three months of 2020.
China’s economy also faltering
The world’s second-largest economy shrank at an annualised rate of 6.8% during the first quarter and Beijing will not set an economic growth goal for this year.
‘A crisis like no other’
Continuing uncertainties surrounding the future spread of COVID-19 and the likelihood of developing a successful vaccine obviously make it difficult to predict the future path of the global economy. The International Monetary Fund’s (IMF) latest assessment suggests we are facing ‘an uncertain recovery’ from a ‘crisis like no other.’ The IMF projections for 2021 show a rebound in global growth of 5.4%, but the IMF has stressed that there is a higher than usual degree of uncertainty around this forecast
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