The world economy is likely to face tough recovery from the Covid-19 led crisis, suggested two reports recently.
The reports predict that the global growth will struggle to revive from the lockdowns, travel restrictions and business closures meant to contain the coronavirus pandemic.
IHS Markit stated that it expects the world economy to contract to 5.5 percent this year, which is triple the damage it had seen in the 2008 financial crisis, and then struggle to regain the grip.
“While growth in the hardest hit economies may snap back briefly, the momentum will soon fade,” the financial research firm warned. It expects the U.S. economy to contract 7.3% this year and the collective economy of the 19 European countries that share the euro currency to recoil 8.6%.
IHS further predicts that there will be a series of business bankruptcies and careful spending by consumers trying to repair their household finances and uneasy about getting back old habits that drive economic growth – shopping, eating out, booking vacations and going to movies.
“Government leaders wanted to err on the side of caution, and, as a result, we basically shut down large parts of the economy,” said Sara Johnson, executive director at IHS Markit. “I suspect we overdid it, but it’s perhaps too soon to second guess.”
Similarly, Deutsche Bank Wealth Management have also warned “hoped-for” rebound in the second half of 2020 won’t be sturdy enough to unwrap the damage received in the first, at least among the advanced economies namely United States, Europe and Japan. “We don’t expect developed economies output to be back to pre-crisis levels until 2022,” the report said.