In November, Moody’s Investors Service forecast G-20 economies in 2020 would grow by 2.6%, but now estimates real GDP will contract by 0.5%, followed by a pick-up to 3.2% in 2021.
The ratings agency projects “cumulative contraction” over the first and second quarters of 2020 of 5.4% in Germany, 4.5% in Italy, 4.3% in the U.S., 3.9% in the U.K. and 3.5% in France.
“Although supportive fiscal and monetary policy measures will likely aid recoveries with above-trend growth in the subsequent quarters and in 2021, the output loss in the second quarter is unlikely to recover,” Moody’s stated in a research note.
It forecasts real GDP growth in China of 3.3% this year followed by 6% growth next year. (It also estimated that in the first quarter China’s economy contracted by about 10% on a sequential basis.)
“Slow improvement in consumer demand will temper the pace of China’s recovery,” it stated. “In other emerging market countries, a sharp reduction in GDP in the second quarter is also inevitable, especially where strict containment measures have been imposed.”
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