COVID-19 Hits Global Economy... Countries Downgrade Growth Forecasts

Possibility of Technical Recession in Japan
Warning of Negative Growth Potential in Singapore
WTO Expresses Concern Over Declining Trade Volume

[Asia Economy Reporter Naju-seok] Due to the novel coronavirus infection (COVID-19), countries around the world are lowering their growth forecasts. As the global merchandise trade market is also expected to perform sluggishly, growth rate forecasts for various countries are expected to be revised downward one after another.

On the 17th (local time), foreign media analyzed that Japan's economy will enter a recession in the first quarter of this year due to COVID-19. The foreign media explained that Japan's already struggling economy will be hit as a result of a sharp decline in Chinese tourists and disruptions to supply lines that were produced in China. Earlier, the Japanese Cabinet Office announced that the real gross domestic product (GDP) in the fourth quarter of last year decreased by 1.6% compared to the previous quarter (July to September). When annualized, this corresponds to -6.3%. This result reflects seasonal factors such as typhoons and the impact of consumption tax increases, but with the added effect of COVID-19, a greater blow is inevitable.

Singapore also revised its GDP growth forecast for this year downward from 0.5~2.5% to -0.5~1.5%. The Singapore Ministry of Trade and Industry predicted that both trade and manufacturing will inevitably be hit due to decreased demand within China and supply chain disruptions.

The economic growth forecast for China, the origin of COVID-19, has also been lowered. The global credit rating agency Moody's revised China's GDP growth rate for this year down from 5.8% to 5.2%.

Warning signs have also appeared in Brazil, South America. The Central Bank of Brazil analyzed in its weekly economic outlook report that market sentiment is rapidly freezing due to COVID-19. With lowered growth and inflation forecasts, the possibility of a recession has increased.

Experts expect that considering China’s economy accounts for 20% of the global economy, if COVID-19 prolongs, the global economy will suffer significant damage. There is also an analysis that if the COVID-19 situation continues until this summer, the global GDP will decline by 1%. The World Trade Organization (WTO) also analyzed that the growth of global merchandise trade will be sluggish due to COVID-19. The WTO stated that the merchandise trade volume, which was already not good, will suffer additional damage due to COVID-19. The WTO announced that the merchandise trade index recorded 95.5 in December last year, down from 96.6 the previous month.

This content was produced with the assistance of AI translation services.