Global spending on the retail industry is set to fall by a phenomenal $549 billion in 2020 as global debt swells

• Global spending on the retail industry will diminish by $549 billion in 2020, according to a forecast by analytics firm GlobalData.
• Retail spending in North America and Europe is expected to contract by 4.8% and 4.4%, according to the estimates.
• GlobalData also anticipates global debt to surge significantly in the first half of 2020 as a result of uncertainty in financial conditions and a lowering of central bank policy rates across the globe.
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With about three million coronavirus cases worldwide and many countries enforcing widespread lockdowns, global spending on the retail industry is expected to fall by 3% in 2020 — equivalent to about $549 billion — compared to an expected 5% rise prior to the pandemic, GlobalData said Tuesday.

"North America and Europe are set to experience the steepest drops in retail spend forecast to decrease 4.8% and 4.4% respectively," said Sofie Willmott, lead analyst at GlobalData.

"Asia Pacific is expected to only see a relatively minor decline of 1.3% which looks good relative to other regions, pre-COVID-19 we had forecast the region's growth to be 7.2%," she said in statement.

The analytics firm also predicts that global debt to surge substantially in the first half of 2020 from uncertain financial conditions and a reduction in central bank policy rates around the world.

Retail sales in the US slumped 8.7% in March 2020, representing the largest month-to-month decline in US retail since the government began keeping track of the data in 1992.

The immense downswing in sales showed just how rapidly retail spending has slowed since many parts of the US imposed lockdowns to curb the spread of the coronavirus.

Along with an increase in debt burdens on both developed and emerging markets, the level of global debt accounted for more than twice of the global gross domestic product, GlobalData found.

"A rise in unplanned government expenditure in the form of high stimulus packages will widen the budget deficit and governments will have to curtail productive investments as additional amount is spent on paying off the interest on the debt," said Shalin Vora, economic research analyst at GlobalData.

"On the other hand, excessive private debt, especially during the pandemic, may increase the inability to pay off the loans and lead to a rise in defaults due to higher unemployment and lower wages," she said.