Coronavirus: BofA says global economy already in recession

Mumbai, Mar 20 () For the third time in three days, the Wall Street brokerage Bank of America Securities has lowered global growth projections on Friday to zero, saying the world has already plunged into recession because of the coronavirus pandemic.

On Wednesday, it had projected global growth at 2.2 per cent, which was lowered to only 40 basis points (bps) on Thursday, shaving down 180 bps and on Friday, it said the global economy is in recession.

Similarly, in two days to Thursday, the brokerage had lowered India forecast twice -- from 5.1 per cent forecast on Wednesday to 4.7 per cent on Thursday. It had also massively lowered the June quarter growth to 3.1 per cent.

In a late-evening note, BofA Securities said, "We expect global GDP growth to drop effectively to zero this year, matching the major recessions of 1982 and 2009."

At the peak of the shutdowns, gross domestic product (GDP) will drop dramatically, including a 30 per cent or more decline in the first quarter Chinese growth, while the US has already landed in the dump with a record 12 per cent sequential drop in second quarter.

The US recovery will begin in the second half but the speed and magnitude will depend on the policy response. We believe there is no upper bound, it added.

"We believe that the US economy has fallen into recession, joining the rest of the world, and it is a deep plunge. We now expect the world's largest economy to collapse 12 per cent qoq (quarter-on-quarter) in 2Q following only 0.5 per cent growth in 1Q," it said, adding that from the third quarter, it will begin to grow taking the full-year contraction to 80 basis points. BEN HRS