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COVID-19 Eases Unevenly, And The Economy Begins To Mend, Article Says

NEW YORK (S&P Global Ratings) July 6, 2020--As the COVID-19 health and economic shock appears to have peaked in most developed countries and China, the focus has shifted to the recovery, said an article, titled "The Global Economy Begins A Slow Mend As COVID-19 Eases Unevenly."

Many emerging markets, however, are struggling to contain the virus and the economic fallout.

We now forecast global GDP to contract 3.8% in 2020, worse than the 2.4% contraction we previously expected, mainly reflecting a deeper, longer hit to emerging markets, led by India. We see a reasonably strong bounce in 2021-2023 with global growth averaging above 4%, but with permanent lost output from the COVID-19 shock.

"The risks to our baseline are varied and remain on the downside," said Paul Gruenwald, global chief economist. "Health developments and related restrictions are key in the next year; productivity and public balance sheet risks lie further out."

GDP declined on the order of 30% to 40% at an annualized rate for a one-quarter shutdown in China (January-March), much of Europe (spanning the first and second quarters), and the U.S. (April-June).

Services bore the brunt of the pain, in contrast to a typical business cycle downturn. Unemployment rates varied substantially across countries; they are highest in the U.S., although pressures to reduce employment due to plunging demand were present everywhere. In Europe and Asia these pressures showed up mainly as reductions in hours worked combined with modest rises in unemployment rates, while in the U.S. the outcome was a meteoric rise in joblessness.

"The speed at which activity collapsed was unseen in modern economic history," said Mr. Gruenwald.

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Global Chief Economist:Paul F Gruenwald, New York (1) 212-438-1710;
paul.gruenwald@spglobal.com
Media Contact:Luke Shane, New York + 1 (212) 438 1244;
luke.shane@spglobal.com

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