JOHANNESBURG - NKC African Economics has warned that global economic growth in the first half of 2020 would be even weaker than its zero percent forecast as more countries extend lockdowns, causing sharp falls in output at a global level.
NKC, a research think tank owned by Oxford Economics, said yesterday that the downturn would reflect broad-based revisions with evidence in China showing that prolonged lockdowns triggered by the spread of the coronavirus had larger adverse effects on activity.
Ben May, director of global macro research at Oxford Economics, said further lockdowns had been announced, most notably in some US states, India, Brazil, and Mexico, while other governments have also hinted at extending the duration of lockdowns since then.
May said the unprecedented rise in US jobless claims and reports that 500000 people in the UK had applied for universal credit had also added to the downside risks to growth.
“The growing number of shutdowns suggest that our forecast for 2020 global GDP growth of zero percent may now be too optimistic,” May said.
“As in China, the transition to regular activity after lockdowns are lifted may take time.
“Some restrictions, most notably foreign travel, are likely to remain in place well after other restrictions are lifted. And the large number of lockdowns internationally are bound to cause extended supply chain disruption.”
Last month NKC lowered its global gross domestic product (GDP) forecast to zero percent, down from 2.5percent in January on the coronavirus spread - the second-weakest rate in almost 50 years.
A variety of global organisations have also lowered their world growth forecasts from above 3percent since the coronavirus was unleashed on to countries outside of China.
May said NKC estimated that, outside China, economies in a severe or partial lockdown accounted for nearly 50percent of global GDP, and this was likely to restrict business and spending.
He said even if lockdowns only lasted a month or so, activity and spending could remain subdued for a longer period - perhaps as long as two months or more.
“Although all the regional shutdowns in China are set to end by early April, lockdowns will take a heavy toll on the world economy in March and beyond,” he said.
“The upshot is that while some governments may impose much longer shutdowns than the Chinese authorities did, we don’t think this will be the most likely outcome.
"While there will be exceptions, we expect severe lockdowns to be scaled back after three-six weeks in most economies.”