InvestNow News – 1st May – AMP Capital – Quarterly Strategic Outlook April 2020
Executive summary
The next few weeks will be dominated by the flow of data that will demonstrate the extreme negative economic effects of governments all around the world attempting to contain the spread of the COVID-19 virus.
Most major developed and developing economies will fall into deep recession in the first half of the year, though we expect some degree of stabilisation later this year.
Overall in 2020 global growth looks set to post its first negative result since the depths of the Global Financial Crisis. The worse outcome in 2020 reflects the fact that developed and developing economies have been hit the same, whereas the GFC was primarily a developed economy event.
With key developed economies being impacted later, we are still yet to see the extent of the damage, but it will be significant. The human toll is also high, and not just for those directly affected by the virus. Unemployment is rising fast, underlining the widespread social harm.
Last year the worry was manufacturing sectors in the face of concern about the direction of trade policy. It was services and consumer spending that kept economic growth relatively solid over the year as employment growth remained strong and wage growth started to emerge. Now the concern is sharply higher unemployment and extreme weakness in services and consumer spending.