Moves to slow the spread of the coronavirus will have a "massive" impact on the global economy, S&P Global Ratings warned.
There is a growing downside risk to the agency's forecasts, even compared to a week ago, said a report Tuesday detailing the latest views from S&P Global's economics group, which provides forecasts and other input to S&P Global Ratings' analysts.
U.S. second-quarter GDP is expected to contract at a rate at least double the 6% estimate made last week. The group also expects a contraction in the first quarter, the report said.
Figures were not available.
For Europe, the first half of 2020 looks to be similar to the U.S. in terms of growth, but with "a somewhat larger decline in the first quarter than the second because the shock started earlier there."
For China, where the virus emerged late last year but appears to now be contained, the economy looks to be stabilizing. The firm forecasts a 13% contraction in China in the first quarter on an annualized basis, but expects growth in the second quarter.
Emerging markets such as Brazil, India and Mexico are set to see a similar shock to China, with a possible double-digit hit to GDP in the second quarter. The report noted that there are less data available from these countries since the pandemic hit this group of countries last.
In assessing the economic and credit implications S&P Global Ratings used government authority assumptions that the peak of the pandemic will hit between June and August.
"We believe measures to contain COVID-19 have pushed the global economy into recession and could cause a surge of defaults among non-financial corporate borrowers," the report said.
"Speed seems of the essence, as is fostering a setting in which the economy — labor markets and supply chains based on small and medium-sized businesses, in particular — can get back to normal quickly once the pandemic passes," the report said. "The longer it takes for governments to implement fiscal support, the more damage there'll be to the economy."
The warning came after a similar statement from the International Monetary Fund Managing Director Kristalina Georgieva.
The outlook for 2020 global growth is negative, said a statement following a call Monday with the Group of 20 finance ministers and central bank governors.
"A recession at least as bad as during the global financial crisis or worse," she said, outlining three points from the discussion. "But we expect recovery in 2021."
The IMF strongly supports monetary and fiscal policy measures, but said, "even more will be needed, especially on the fiscal front."
The second point was that advanced economies are generally in a better position to respond to the crisis. More than $83 billion has been withdrawn from emerging markets by investors since the onset of the crisis, she said. The IMF is particularly concerned about low-income countries in debt distress and is working with the World Bank on this issue.
Finally, Ms. Georgieva outlined the IMF's response. Among other measures, it will "massively step up emergency finance," is ready to deploy its $1 trillion lending capacity and is exploring how it could facilitate a broader network of swap lines, "including through an IMF-swap type facility."