The coronavirus outbreak may set global economy back by about $2 trillion this year, says the UN’s trade and development agency, UNCTAD, warning that shock from the epidemic will cause a recession in some countries and push down global annual growth to below 2.5%.
"We envisage a slowdown in the global economy to under two per cent for this year, and that will probably cost in the order of $1 trillion, compared with what people were forecasting back in September," said Richard Kozul-Wright, Director, Division on Globalization and Development Strategies at United Nations Conference on Trade and Development (UNCTAD).
The UN agency said that apart from the tragic human consequences of the COVID-19 epidemic, the economic uncertainty it has sparked will likely cost the global economy USD 1 trillion in 2020. A preliminary downside scenario sees a USD 2 trillion shortfall in global income with a USD 220 billion hit to developing countries (excluding China).
The most affected economies in this scenario will be oil-exporting countries, but also other commodity exporters, which stand to lose more than one percentage point of growth, as well as those with strong trade linkages to the initially shocked economies.
Last week, UNCTAD had pegged the trade impact of the coronavirus epidemic on India at USD 348 million. India also figures among the 15 most affected economies. Slowdown of manufacturing in China due to the coronavirus outbreak is disrupting world trade and could result in a USD 50 billion decrease in exports across global value chains.
According to Kozul-Wright, only a few countries will be left unscathed by Covid-19’s financial ramifications. One "Doomsday scenario" in which the world economy grew at only 0.5 per cent, would involve "a USD 2 trillion hit" to gross domestic product, he said, adding that collapsing oil prices had been “a contributing factor to that growing sense of unease and panic."