A global recession in 2020 is now the ‘base case’


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Morgan Stanley warned traders on Tuesday that the coronavirus pandemic is fundamentally disrupting the world’s economic system.

“World recession in 2020 is now our base situation,” Morgan Stanley main economist Chetan Ahya wrote in a note. “With Covid-19 spreading in Europe and the US after hitting Asia, the disruptions and dislocations in the economic system and marketplaces will result in a [year over year] contraction in world wide growth in [the first half of 2020].”

Morgan Stanley believes the U.S. govt is endeavor a “sturdy financial and fiscal policy response” that “will assistance revive international development” in the 3rd quarter of this yr. But, over-all, Ahya mentioned world financial growth will gradual to .9% this calendar year, “the cheapest because the global money crisis.”

“This time will be worse than the world-wide recession of 2001. While the plan response will present downside protection, the fundamental hurt from both of those Covid-19’s influence and tighter money circumstances will deliver a substance shock to the worldwide economic climate,” Ahya said.

– CNBC’s Michael Bloom contributed to this report.

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