As restaurants, shops, airlines and factories close worldwide, from New York to Paris and Madrid, economists have begun to herald the arrival of an economic recession. No need to warn them anymore. It's between us.
Economic data released by China this Monday demonstrated the economic downturn from the spread of coronavirus in January and February. The second most powerful economy in the world will not get close now.
As governments and central banks in Europe and North America are taking drastic measures to keep the pandemic under control, with the ever-diminishing financial markets, a large number of experts say we are at the beginning of a global crisis.
"Ten days ago it was unclear in the world economy it would go into recession - ten days later no doubt that would happen," David Wilcox, former head of research and statistics at the Federal Reserve Board, told CNN Business. .
Last week, daily life changed radically. About 175,000 cases of coronavirus have been registered, states have restricted circulation and closed public spaces. These decisions will have severe consequences for the economy, as China is proving.
The halt affected any sector of the Chinese economy during the first two months of the year. Retail sales fell by 20.5% during January and February compared to a year earlier, industrial production fell by 13.5% and fixed asset investment fell by 25%. The decline in industrial production was the most drastic ever calculated.
"We are now seeing the impact of curfew in China," said Ben May, director of global macro research at Oxford Economics. Circumstances may vary from state to state, he continued, but "the consequences will most likely be on economic growth."
As China struggles to recover, the situation in Europe and the United States is rapidly deteriorating. Italy, now the epicenter of the pandemic, has more than 24,000 infected. Spain has at least 9,000 and the United States has reported more than 4,000.
On Sunday, Goldman Sachs changed its forecast for United States GDP as a result of spending cuts, manufacturing chain problems and the impact of local quarantines. The investment bank expects the US economy to fall 5% from April to June after a 0% rise from January to March. Growth for the whole year is projected to be 0.4% from 1.2% previously.
"Curfews and panic about the virus will cause substantial damage to economic activity from March to April," economist Jan Hatzius told clients.
Economists at ING said they expect the US economy to fall by 8% in the second quarter, as occurred during the 2008 financial crisis. .
