What's on the horizon for the global economy?
Lewis Alexander | George Buckley | Ting Lu | Takashi Miwa | Rob Subbaraman | Sonal Varma
  • Our updated calendar identifies the top events that should be on your radar this week.

  • We also provide an outlook overview region by region for the rest of the year.

  • In our episode of the week ahead podcast we are looking at the top three market moving themes that should be on your radar.

Our view in a nutshell



  • With COVID-19 spreading, we expect real GDP to keep declining for three quarters through Q2, followed by a gradual recovery.

  • We expect core CPI inflation to continue to decelerate and to plunge below 0% y-o-y in Q4 led by lower oil prices.

  • The ¥108trn stimulus package will help keep the economy from falling into a vicious cycle but have a limited impact on demand.

  • The risk is renewed yen appreciation, caused by a full-blown global recession and further risk averse moves in markets.



  • COVID-19 to derail Asia’s GDP growth to -0.5% y-o-y in 2020, from 5.3% in 2019. 8 out of 10 economies will contract in 2020.

  • After China spillovers in Q1, we expect a sharper growth slump in Q2 due to domestic lockdowns and weaker external demand.

  • A sequential recovery is likely in H2, but at a gradual pace due to spillovers from unemployment and weak corporate profits.

  • Despite the supply-side disruptions, we expect disinflationary pressures due to lower oil prices and weak aggregate demand.

  • Monetary and fiscal policy easing have already been stepped up, but be prepared for even more easing ahead.

  • China: We expect GDP growth to remain negative at -0.5% in Q2 and Beijing to roll out a large stimulus package soon.

  • Korea: Growth will likely contract more sharply in Q2 on slumping external demand; we expect the BOK to cut in Q2.

  • India: COVID-19 amid a weak financial sector to trigger a growth contraction in 2020 and easy policies – monetary, fiscal and liquidity.

  • Indonesia: Despite a sharp growth downturn, the chance of a policy rate hike is rising due to balance of payments fragility.

  • Australia: We now see a sharp recession in H1, with unemployment rising from 5.1% to almost 9% by year-end.


United States

  • We expect a short, but steep, recession in H1 2020 before a gradual recovery aided by fiscal and monetary accommodation.

  • Responding to a significantly weaker outlook, we expect the Fed to remain at the ELB through 2021.

  • The Fed will implement credit facilities already announced and ensure that long-term rates do not constrain the recovery.

  • We expect additional fiscal stimulus from Washington, but it may be less effective due to social distancing.

  • The unemployment rate will rise sharply, peaking around 15-20% in Q2, as labor market conditions deteriorate due to COVID-19.

  • Core inflation will likely be weighed down by COVID-19’s impact on service prices and excess labor market slack.

  • Notable risks include the failure of social distancing policies as well as corporate credit and financial sector stress.



  • As COVID-19 spreads across Europe, we expect the euro area economy to fall into an even deeper recession in 2020.

  • Lower oil prices and a demand shock caused by COVID-19, should push euro area inflation lower.

  • The ECB announced an additional €750bn of QE, and we think the next ECB move will be a 20bp rate cut in April.

  • We have axed again our UK GDP forecasts and see a recession in H1 – with output falling by more than 15% vs Q4 2019.

  • GDP recovers from H2 though takes time to get back to its pre-virus peak. Loose monetary and fiscal policy remain supportive.

  • The BoE has cut rates to 0.10% and announced €200bn of QE. We do not see any further easing in our base case.

  • The tail risk of a Brexit cliff edge at end-2020 has risen, but the outcome is uncertain with COVID-19 disruption.


For more information, read our weekly report here.


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