The coronavirus pandemic will cause a global recession as action from governments around the world fails to halt sliding stock markets, warn economists at Barclays.
The US Federal Reserve has cut interest rates to a target range of between 0% and 0.25%, and unveiled a significant financial stimulus package. It follows a rate cut by the Bank of England and further quantitative easing by the European Central Bank. According to Barclays, these actions have had limited impact as the virus has moved quickly from China, through Europe and into the US.
Travel bans, school and university closures, the postponement of sports events and other restrictions are all combining to reduce demand.
Barclays predicts global economic growth will be just 1.8% this year, with the US falling from growth of 2.3% last year to 0.8% in 2020. It also says Europe will fall into negative growth and shrink by 0.5%, while UK economic growth will fall by 0.2%.
Commenting on the global outlook, Christian Keller, Head of Economic Research at Barclays, said: 'Developments this week have crushed any remaining hopes of containing COVID-19 to certain regions or to areas within certain regions as new cases of infection accelerate.
'A global recession is now likely, Europe looks to be fully affected by the virus and, increasingly likely, also the US.
'The significant restrictions to public life, including quarantines, school and university closures, reduced travel, limitations to the size of events et cetera imply large negative effects on activity in the second quarter.'