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NSR H2 2020 Excerpts - Global Recession - The Pandemic Edition

• Over the next few days, we will feature excerpts from our core strategy document – The Nigeria Strategy Report. The report communicates  key happenings in global and domestic financial markets over H1 2020 and provides our stance on what we believe will be the major themes underpinning investor sentiment over the rest of the year. We begin the series with a look at key happenings that dominated the global economic and financial landscape over H1 2020 as well as our outlook for FY 2020.
• In our previous H1 20 Outlook report, we expressed optimism for global growth prospects in 2020 (IMF predicted FY20 growth of 3.4%) on the basis of the resolved US-China trade war, a partial resolution to the Brexit uncertainty and improvements across the sub-regions of emerging markets. Instead, global economies were hit by a Great-Depression-esque crisis, following the breakout of the COVID-19 pandemic. The disease has infected over 11 million people worldwide and claimed the lives of over 500,000 individuals. The lockdown measures put in place across to stop the spread of this highly infectious and deadly disease has handicapped the global economy. Amongst advanced countries, Japan has slipped into a technical recession while others such as the EU and the US) are standing on the brink, waiting for Q2 numbers to ratify widely consensual views. Akin to advanced economies, the widespread of the global pandemic has adversely affected growth in emerging and developing economies. Economies such as China and India have reported record-low growth.
• The response from fiscal and monetary authorities in these economies, however, has been swift and decisive. Interest rates have been slashed and trillions pumped into the economy by Central Banks. Additionally, governments have introduced huge fiscal stimulus programme to support businesses and those who have lost their jobs as a result of the pandemic. Going forward, the recovery will be largely determined by nations’ ability to prevent another large-scale outbreak of the disease. In the midst of wild uncertainties regarding a second wave of the virus, the IMF projects that the global economy will contract by 4.9%YoY in 2020 with advanced economies contracting by 8.0%YoY and EMDE down by 3.0%YoY.