'Global economy to contract 1.5% in 2020 amid COVID-19 pandemic'

The global economy was expected to contract 1.5 per cent in 2020 amid the coronavirus pandemic, according to the Washington-based Institute of International Finance (IIF).

The IIF is a global association of the financial industry with over 450 members from more than 70 countries and regions, reports Xinhua news agency.

"We cut our global growth forecast from 2.6 to 0.4 per cent in the last two weeks, but the building COVID-19 pandemic, the OPEC price war and mounting credit stress in advanced and emerging markets continue to reshape the picture in fundamental ways," the IIF said in a report published on Monday.

"Our global growth forecast now stands at -1.5 per cent, with a contraction of 3.3 per cent across mature markets and growth of only 1.1 per cent," in emerging markets, the report said, adding that there was "huge uncertainty" about the economic impact of COVID-19.

"It is as of now unclear how long de facto shutdowns in many countries must last to contain the virus. And given the severity of the shock, it is also unclear if consumer and investment activity rebounds quickly once quarantines are lifted," the report said.

The report also suggested that both the US and the euro area were already in recession, with negative growth in the first quarter and large contractions in the second quarter.

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For the whole year, growth rates in both the regions was expected by the IIF to contract 2.8 per cent and 4.7 per cent.