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Sunday, February 25, 2024

£5 trillion: how much the Covid-19 pandemic cost the global economy in 2020

THE pandemic will wipe an eye-watering $6.7 trillion – or £5 trillion – from the global economy in 2020, new analysis suggests.

The forecast fall in global GDP – down 5.2% from $89.94 trillion to $83.19 trillion – is equivalent to the annual economic output of Germany and France combined.

It would represent the deepest recession since World War Two, nearly three times as severe as the one caused by the 2008 credit crunch.

The study, compiled by online platform IG, found that advanced economies such as the US, UK and EU were most severely hit, with growth set to fall by an average of 7% this year. Emerging markets will suffer a 2.5% drop.
It estimates 92% of countries will have been plunged into recession, the highest since the world was laid low by the smallpox pandemic of the 1870s.

The analysis suggests that 346 billion working hours were lost globally in the first half of 2020, which is equivalent to 555 million full-time jobs worldwide.

Meanwhile, the impact on equity markets has seen catastrophic falls across all major indices. The S&P 500, a benchmark of US companies, suffered one of its worst collapses on record over the first 100 days of the crisis.

It surpassed crashes triggered by Black Monday, the burst of the dot-com bubble and the Great Recession. The FTSE100, Germany 30 and HS50 endured similar falls.

A comparison of the impact of the pandemic on the S&P 500 with other crises

Leading economists warned there will be many bumps in the road as the world sets out on the path to recovery.

Dr Gerard Lyons, chief economic strategist at Netwealth, said that in the UK: “The economy will recover, and in terms of output it will be a good recovery, but the big issue is what happens with jobs. Unemployment may not get back to pre-crisis levels for a few years.”

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