Coronavirus fallout to hit economy harder than Great Recession, report claims

The economic hit from the coronavirus pandemic will far outstrip that of the global financial crisis in 2009, with world GDP set to fall 2.8% this year.

A new report by global advisory firm Oxford Economics predicts a 7% contraction for the global economy in the first half of the year – about double the size of the fall in global output for early 2009.

A new downside scenario assumes lockdowns continue into the third quarter of the year. "The scale and speed of the downturn in our new downside scenario is without parallel in the last 50 years of comparable data," said the report. In that case, global GDP is expected to fall 12.5% for the year ended Sept. 30, followed by a steady recovery continuing into 2021. Global GDP in the downside scenario would have contracted by 8%.

The U.S. and eurozone are expected to record GDP drops of 8% or more in the second quarter, while China is expected to rebound following a 12% fall in the three months ended March 31.

For the U.S. baseline scenario, Oxford Economics assumes social distancing for 10 to 12 weeks, a 9% peak-to-trough fall in GDP and a 32% drop in output on an annualized basis, for the second quarter. For 2020 as a whole, U.S. GDP is expected to fall about 4%.

In a downside scenario, where lockdowns last for 18 to 24 weeks, U.S. GDP could fall 7% to 9% for the year.

All emerging markets are expected to suffer, but the impact of COVID-19 will be "awful for some," the report said. Latin America and Africa are expected to be the worst affected, given relatively poor health systems, weak fiscal positions and greater dependence on commodities. Countries most at risk are Bolivia, Nigeria and Peru, according to the report. GDP forecasts were not provided.