Economic Forecast: Downturn ‘sharper but shorter’ than 2008, says Morgan Stanley – IMF warns of catastrophic consequences in sub-Saharan Africa

13th May 2020 (Last Updated May 13th, 2020 11:18)

13 May

Morgan Stanley Chief Economist and Global Head of Economics Research Chetan Ahya said this economic downturn will be sharper—but shorter—than the Global Financial Crisis (GFC) that began in 2008.

His view is based on the cause of the downturn and that, “this recession has prompted the most coordinated and aggressive monetary and fiscal easing that we have witnessed in modern times”.

“By our estimates, global economic contraction will trough at 7.5% in the second quarter of this year (far worse than the 2.4% contraction in the first quarter of 2009), while output—for the world as a whole and developed markets—will return to prerecession levels in 4 and 8 quarters, respectively, compared with 6 and 14 quarters after the GFC.”

The International Monetary Fund (IMF) has warned that a failure to contain the spread of the virus in sub-Saharan Africa will have catastrophic economic, health and humanitarian consequences.

According to the latest Regional Economic Outlook by the IMF the sub-Saharan Africa economy will contract by 1.6 percent this year; the worst reading on record.

Economies across the regions of the European Bank for Reconstruction and Development (EBRD) may contract on average by 3.5% this year, because of the impact of the coronavirus, with a rebound of 4.8% possible in 2021.

However, in its latest Regional Economic Prospects report, the EBRD warned that these projections are subject to “unprecedented uncertainty”.