[Asia Economy Reporter Jeong Hyunjin] Amid expectations that the spread of the novel coronavirus infection (COVID-19) will cause recessions in the Group of Twenty (G20) countries, the British economic research institute Economist Intelligence Unit (EIU) announced that South Korea's real gross domestic product (GDP) growth rate is projected to record -1.8% this year.
EIU recently downgraded the growth forecasts for all G20 countries in a report titled "COVID-19 will push almost all G20 countries into recession." The EIU initially expected global economic growth to increase by 2.3%, but revised the forecast to a 2.2% decline due to the impact of the COVID-19 outbreak.
Looking at individual countries, South Korea's forecast was lowered by 4 percentage points from the previous 2.2% to -1.8%. The United States was downgraded from 1.7% to -2.8%, and China from 5.9% to 1.0%. Germany, Italy, and Argentina are also expected to see significant GDP declines of -6.8%, -7.0%, and -6.7%, respectively.
EIU noted that the United States will be significantly affected not only by the COVID-19 crisis but also by the recent oil price drop caused by the conflict between Saudi Arabia and Russia. China is expected to suffer greater economic damage from this crisis than during the 2003 Severe Acute Respiratory Syndrome (SARS) outbreak.
Among the G20 countries, 17 are projected to experience negative growth this year. Only three countries?China, India (2.1%), and Indonesia (1.0%)?are expected to see positive growth.
Agathe Demarais, a researcher at EIU, stated, "We assumed an economic recovery in the second half of the year, but the downside risks threatening this baseline scenario are extremely high. At this stage, there is no clear exit strategy to lift lockdowns." She added, "With reduced fiscal revenues and increased public spending, many countries may be on the brink of a debt crisis."
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