NEW YORK–Morgan Stanley has issued a warning that the coronavirus pandemic is going to hit the economy hard.
“Global recession in 2020 is now our base case,” Morgan Stanley chief economist Chetan Ahya wrote in a note, reported CNBC. “With Covid-19 spreading in Europe and the U.S. after hitting Asia, the disruptions and dislocations in the economy and markets will trigger a [year over year] contraction in global growth in [the first half of 2020].”
Morgan Stanley believes the U.S. government is undertaking a “strong monetary and fiscal policy response” that “will help revive global growth” in the third quarter of this year, CNBC reported.
But, overall, Ahya said global economic growth will slow to 0.9% this year, “the lowest since the global financial crisis.”
According to the Morgan Stanley analysis, this time will be worse than the global recession of 2001.
“While the policy response will provide downside protection, the underlying damage from both Covid-19′s impact and tighter financial conditions will deliver a material shock to the global economy,” Ahya said.