“The eurozone and U.K. economies are now facing a recession of -2% for 2020,” said S&P Global Ratings Senior Economist Marion Amiot, in the latest European economic forecast published today, “COVID-19: The Steepening Cost To The Eurozone And U.K. Economies.”
The relatively swift recovery that we expect to start in the second half of 2020 will still take time, as job losses and uncertainty will slow the return to previous levels of consumption, investment, and trade.
“Risks to our forecast are skewed to the downside: The pandemic might last longer and be more widespread than we currently envisage. The size and kind of policy responses countries take now are key to avoiding permanent economic damage later,” S&P Global Ratings’ EMEA Chief Economist Sylvain Broyer said.
Most of the multiple shocks to the European economy are growing, such as the shock to demand, both internal and external, and the shock to supply. And then, there is the shock to confidence from a sharp tightening in financial conditions and uncertainty about the length of isolation measures.
Only monetary conditions have stabilized since our last assessment.
S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak. Some government authorities estimate the pandemic will peak around midyear, and we are using this assumption in assessing the economic and credit implications.
In our view, the measures adopted to contain COVID-90 have pushed the global economy into recession and could cause a surge of defaults among non-financial corporate borrowers (see our macroeconomic and credit updates here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly.
Countries under COVID-19 Lockdown?
A report by The Guardian shows that 20% of the world population is currently on some form of a coronavirus lockdown, meaning their movement is being actively restricted and controlled by their respective governments, as reported by Statista.com.
According to an analysis by Statista, that number is already closer to 25%. While there are all sorts of different lockdowns currently in place, Statista counted those in which governments ordered their citizens to stay at home and only take a minimum of necessary trips outside, while announcing police enforcements and/or fines for people failing to meet the requirements.
The biggest lockdown is currently being enforced in India, where 1.3 billion people have been ordered to stay inside for 21 days starting today. This lockdown exceeds the size of those that happened in China even at the height of the epidemic there, according to the New York Times.
Other big lockdowns are happening in the U.S., where around 20 states and several cities have said that they would be enforcing strict stay-at-home orders, and in Europe, where there are nationwide lockdowns in France, Spain, the UK, Italy and elsewhere (totaling more than 300 million people). Latin American countries have also started to enforce lockdowns, often with the help of the military. There are currently 163 million people on lockdown in Peru, El Salvador, Argentina, Venezuela and Colombia.
The most draconian lockdown laws were passed in Jordan, where anyone caught out on the street can be punished with up to one year in jail, according to a government order. The Jordan lockdown is affecting 10 million. In New Zealand, four million are staying at home during an enforced lockdown.