Coronavirus Pandemic – Financial Market Experts Expect Sharp Drop in Global Growth
Research
19.03.2020
The coronavirus hits the world economy: financial market experts expect the pandemic to put a major strain on the global real gross domestic product (GDP). This is likely to have a particularly severe impact on the German economy. The forecasts vary, however, with regard to the individual sectors. This is the result of a special question featured in the most recent ZEW Financial Market Survey conducted with 170 financial market experts. The survey was carried out by ZEW from 9 to 16 March 2020.
According to the surveyed experts, the German economy is likely to experience the most severe effects compared to the rest of the world, with 39.0 per cent of the participants expecting the decrease in overall growth caused by the coronavirus pandemic to range between 0.5 percentage points and one percentage point. 36.8 per cent of the respondents expect a decrease of more than one percentage point, and only 24.2 per cent anticipate a slight decline amounting to less than 0.5 percentage points.
For the EU, the expectations of the financial market experts are somewhat less gloomy, but still pessimistic. 42.4 per cent of the respondents expect the drop in European growth to range between 0.5 percentage points and one percentage point. According to the survey participants, the US and Japanese GDP will be affected to a much lesser extent. Growth losses resulting from the coronavirus pandemic in these two countries are expected to amount to up to 0.5 percentage points.
“While these survey results paint a clear picture, they should be interpreted with great caution. The share of financial market experts anticipating relatively strong negative effects for the real global GDP increased towards the end of the survey period. Since the political, economic and healthcare-related consequences are becoming increasingly severe in many countries outside of Asia, the survey results only represent a snapshot in time. We should therefore expect a further deterioration of the economic outlook,” says ZEW President Professor Achim Wambach.
With regard to the development in Germany, the respondents’ expectations vary significantly depending on the individual sectors. According to more than half of the experts, the automotive and mechanical engineering sectors, banks as well as the steel sector will be particularly hard hit by the consequences of the coronavirus pandemic. For some sectors, on the other hand, the survey participants predict positive effects due to rising demand. This is particularly true for the pharmaceutical industry, but also for the information technology and telecommunications sector, as well as consumption and trade.