The economics team at Nomura have slashed their forecast for the global economy this year, again.
They now expect world GDP to shrunk by 4% during 2020 -- with major economies including the UK contracting by over 10% in April-June (a really grim, and highly credible, forecast)
We have slashed our 2020 forecast of global GDP growth to -4.0% and now expect %q-o-q saar growth in Q2 of -42% in the US, -43% in the euro area and -44% in the UK - all similar to that in
Chinain Q1.
[SAAR = seasonally adjusted annual rate, ie how much an economy would change if one quarter was extended over a year]
In a best case scenario, Nomura reckon the world economy would only shrink by 2.2% -- but in a bad outcome, it could slump by 6.9%.
In the good scenario, the virus is quickly beaten through strict compliance with social distancing, technological innovations and medical breakthroughs. The result is still a short, deep recession, but it is followed by a sustained recovery.
In the bad scenario, the virus beats us. The intravenous cash flow support policies do not last long enough to save companies and jobs. The result is a large, permanent loss in output featuring persistently high unemployment, company liquidations and financial crise.