The COVID19 pandemic and the measures put in place to contain it have delivered an enormous shock to the world economy. Indeed, the IMF has said that this crisis is like no other due to the shock being so large and sudden, with a continued high degree of uncertainty about how long it will last. As a result, economic forecasting in the current unprecedented COVID19 recessionary environment is very difficult, with a wide range of outcomes possible for GDP.
What is clear, though, is that GDP will contract sharply in 2020. Incoming macro data are reflecting a sudden and very severe contraction in activity. For example, the Composite PMIs for April from the US, Eurozone and UK plummeted to record lows, with the weakness most evident in the services sector and consistent with a large contraction in business activity. Other data, including US monthly payrolls and jobless claims, highlight the unprecedented collapse in employment and surge in unemployment. Big falls in GDP for the first quarter of the year are being seen in many economies.