Global economy faces worst recession ever

The current economic crisis is unlikely to end quickly, and the economies around the world, including leading countries, need to prepare for a deep recession.

This assessment was given by Director of FBK Grant Thornton Strategic Analysis Institute Igor Nikolaev at a meeting of FBK’s Economic Club: How much will the coronavirus cost? Medium and long-term consequences of the pandemic, held via remote participation.

The recession the global economy has already entered may become the worst in the entire period of the World Bank’s monitoring, the economist said. In 2009, the global GDP showed the worst result in almost 60 years – a plunge into the red, down 1.7% compared to 2008. This new crisis is also going to be long (although it is certainly difficult to give precise estimates yet).

“Medics do not sound very encouraging either, saying they are unlikely to develop a vaccine for another 11 months, or even a year. This is a long time,” Igor Nikolaev added.

But most importantly, the pandemic has already stricken a blow on all leading centers of economic development, including the US and European Union. China was less affected and has already begun restoring its economic activity. However, things may still change.

“We need to take into account the fact that the prospects for China’s economic revival to a large extent depend on what will happen to the US and the EU because they are the main consumers of Chinese exports. If things are bad there, China won’t be able to recover quickly even being ready from the medical point of view,” Igor Nikolaev said. 

As for Russia, the crisis may be devastating: the growth rate will become negative and reach the 1992 level. Undoubtedly, we are witnessing a sharp deterioration of all economies in the word, but Russia has to withstand two challenges: the pandemic and the falling oil prices.

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