S&P Global Ratings expects US GDP to contract at least 12% year over year in the second quarter due to the impact of the actions taken by the national and local governments and businesses to limit the spread of the coronavirus.
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The rating agency's previous estimate was for a 6% decline in growth.
"It's now clear that the hit to global economic activity from the measures to slow the spread of the coronavirus pandemic will be massive," S&P Global Ratings said, warning that downside risks to its forecasts continue to grow.
S&P Global Ratings called on governments to immediately implement fiscal support or risk more economic damage. "Regardless, the hit to growth in the first half of the year will be worse than we thought last week," it said.
For Europe, the new projected GDP decline in the first half is similar to the rating agency's forecast for the U.S., but the contraction is steeper in the first quarter due to the earlier spread of the virus there.
China's economy is forecast to expand in the second quarter following an estimated 13% annualized contraction in the first quarter and the containment of the virus, according to S&P Global Ratings.
"Its economy seems to be stabilizing," the rating agency said. "Anecdotal evidence — such as traffic patterns and shipping data — as well as official figures show that economic activity is beginning to recover, albeit at a slower rate than originally expected."
S&P Global Ratings also projected double-digit-percentage GDP declines in the second quarter for emerging markets that were last hit by the pandemic, such as Brazil, India and Mexico.
The rating agency's economic assessments are based on the assumption that the pandemic will peak in June and August.
"We believe measures to contain COVID-19 have pushed the global economy into recession and could cause a surge of defaults among nonfinancial corporate borrowers," S&P Global Ratings said.