The U.S. and European economists are predicting a recession as a result of the new coronavirus, COVID-19.
ILO: Impact of COVID-19 on Economy Could Affect 25 Million Jobs
The Initiative on Global Markets at the University of Chicago's Booth School of Business published the results by 74 economists on the likelihood of a major recession as a result of the new pandemic.
Eighty-two percent of European experts and 62 percent of U.S. based ones agreed that there is likely to be a recession after the impact of the virus on the world economy.
"A sharp slowdown is likely; whether it will be persistent enough to rise to the level of a recession is not clear yet," Anil Kashyap of Chicago Booth commented.
According to Jean-Pierre Danthine of the Paris School of Economics, it is inevitable that at least two quarters would register negative growth. Still, subsequent developments will depend heavily on political reactions to the crisis.
For most economists, the impact of the measures taken to contain the outbreak has already disrupted economic activities.
"The contagion rate worries more than the mortality rate itself as it shuts down the whole economy to contain effects on the health system," Elena Carletti of Bocconi University said.
Stemming the spread requires "stopping economic activity altogether," which is "a major supply shock," Luigi Guiso of the Einaudi Institute for Economics and Finance added.
"Even if (the) death rate is low, it will be because containment has been effective, and that will adversely affect aggregate supply and demand," Patrick Honohan of Trinity College Dublin highlighted.
For his part, Richard Schmalensee at the Massachusetts Institute of Technology said that "saying there will be a big impact might be a bit too strong, although the preventive measures being taken in many countries will surely have a significant disruptive effect (in the economy)."
Kenneth Judd of Stanford University was among the few to disagree that a major recession is on the horizon.
"If it is like ordinary flu, then (the) economy should quickly recover. COVID-19 only threatens old and feeble economic expansions," Judd said.
Global stock markets have suffered steep losses during the past two weeks. U.S. stocks triggered four circuit breakers to halt panic selling, European stock continued to plunge with little losses recovered, and major world currencies depreciated severely against the U.S. dollar as investors flew to stockpile safe-haven assets.
Meanwhile, the International Labour Organization (ILO) said on Wednesday that the coronavirus pandemic could trigger a global economic crisis and destroy up to 25 million jobs around the world if governments do not act fast to shield workers from the impact.