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May 27, 2020

Economic Update: Fitch Ratings cuts GDP forecasts again – McKinsey see opportunities for a greener recovery

By Paul Dennis

27 May

Fitch Ratings has made further cuts to world GDP forecasts in its latest Global Economic Outlook (GEO).

Brian Coulton, Chief Economist, Fitch Ratings, said: “World GDP is now forecast to fall by 4.6% in 2020 compared to a decline of 3.9% predicted in our late-April GEO.

“This reflects downward revisions to the eurozone and the UK and, most significantly, to emerging markets (EM) excluding China.”

Fitch now expects Eurozone GDP to fall by 8.2% in 2020 compared to a contraction of 7.0%, and the UK 7.8% this year.

McKinsey has said that the tragedy of Covid-19 does present an opportunity for a greener recovery.

The consultancy said: “Low-carbon recovery could not only initiate the significant emissions reductions needed to halt climate change but also create more jobs and economic growth than a high-carbon recovery would.

“Our analysis of stimulus options for a European country suggests that mobilizing €75 billion to €150 billion of capital could yield €180 billion to €350 billion of gross value added, generate up to three million new jobs, and enable a carbon-emissions reduction of 15 to 30% by 2030.

Nomura predicted that Covid-19 is to derail Asia’s GDP growth to -0.5% y-o-y in 2020, from 5.3% in 2019. 8 out of 10 economies will contract in 2020 in the region.

The investment bank also said: “We expect China’s GDP growth to remain negative at -0.5% in Q2 and Beijing to roll out a large stimulus package soon.”

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