Daily Management Review

Coronavirus Forces EIU To Lower Global Growth Forecast For 2020


Coronavirus Forces EIU To Lower Global Growth Forecast For 2020
The new risks to the global economy that have cropped up because of the emergence of the novel coronavirus and its fast and severe outbreak in China has forced the global business intelligence firm the Economist Intelligence Unit to bring down its forecast for global growth for 2020 to 2.2 per cent compared to its previous estimate of 2.3 per cent. 
Wuhan, a city of around 11.3 million people in central Hubei province, is the epicenter of the novel coronavirus as it was the city of origin of the virus. It was detected in December last year and has since them spread to most of the regions of China as well as to other countries.
“The Chinese authorities are taking unprecedented quarantine measures to halt the spread of the pathogen, which is likely to have consequences on the global economy,” The Economist Intelligence Unit (EIU) said in a report.
Political instability in a number of countries in et European Union, a sharp deceleration in real GDP growth in the US, China and India and trade war between the US and China as well as among other countries had made global growth in 2019 quite sluggish.
The report firm the firm said that threats of the global growth has been increased by the addition of the spread of the coronavirus since the beginning of 2020.
While mentioning that the spread of the coronavirus is a “threat’ to the growth of the global economy, the EIU also said that it had also reduced the growth in the Chinese economy.
“On the assumption that the spread of the virus will be under control by end-March, we are lowering our real GDP forecast for China in 2020 to 5.4 per cent, from 5.9 per cent previously,” The EIU said in the report.
The calculations and prediction of the Economist Intelligence Unit is based on the assumption that it would be possible to bring the spread of the croronavirus under control by the Chinese authorities within China by the end of March.
“The suggested case fatality rate had stabilised at 2.2 per cent as at February 1; nevertheless, the risk of virus mutation and of heightened transmission during the post-Chinese New Year travel period, and strains on the Chinese healthcare system are grounds for concern,” The EIU said.
In the eventuality that the coronavirus does not spread to India, the EIU forecast strong growth for the Indian economy. “In Asia, we believe that India and Japan, respectively, recorded the best and the worst rates of quarterly growth among G7 and BRICS countries in October-December,” it noted.
The report further said “a series of government stimulus measures, coupled with a low-interest-rate environment, are likely to spur demand and investment in 2020 and to cause a rebound in full-year real GDP growth, to 6.1 per cent (up from an estimated 4.9 per cent in 2019), provided that the coronavirus epidemic does not spread to India“