Mar 5, 2020 - Economy & Business

Coronavirus could shrink global GDP

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Data: OECD; Chart: Andrew Witherspoon/Axios

Here's how serious coronavirus is: With the exception of the global financial crisis, the last time that the world saw a quarter of negative GDP growth was in 1982.

Flashback: Back then, China accounted for only about 1% of global GDP. Today, that number is 15%.

By the numbers: Thanks in large part to a massive slowdown in China, the OECD sees global GDP shrinking at a 0.5% pace this quarter.

  • The forecast then shows a healthy bump back up to a 3.7% growth rate in the second quarter and an even higher 5.5% rate in the third, as the world starts to recover from the coronavirus shock.

Yes, but: All of these forecasts have much higher error bars than usual. There's a very good chance that the OECD's forecast will turn out to have been far too optimistic or pessimistic. We just have no idea which one it will be.

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Stock traders expect stimulus to save the day despite coronavirus fears

Illustration: Sarah Grillo/Axios

News about the coronavirus outbreak got worse on Monday, but stock traders saw a stimulus bat-signal in the sky and sent the Dow to its biggest points gain on record — 1,294 points.

Why it happened: Stock prices jumped after it was confirmed that finance ministers and central bank governors from each of the G7 countries would hold a conference call Tuesday morning, presumably to announce coordinated stimulus measures to deal with the coronavirus outbreak.

The U.S. health care system is short staffed

Data: OECD GDP, OECD doctors,  The Center for Systems Science and Engineering at Johns Hopkins; Chart: Andrew Witherspoon/Axios

Despite being the world's largest economy and having a private health care system that politicians routinely call "the best in the world," the U.S. lags badly among industrialized countries in terms of the number of doctors.

The state of play: The U.S. is 25th in the number of doctors among OECD countries and has the third-lowest number of doctors among countries that have 1,000 confirmed cases of COVID-19.

Go deeperArrowMar 20, 2020 - Health

The looming global great recession

GDP data: OECD, BoA Global Research; Coronavirus data: The Center for Systems Science and Engineering at Johns Hopkins; Chart: Andrew Witherspoon/Axios

Economists have removed their rose-colored glasses in recent weeks and are beginning to price in scenarios for the world that are as bad or much worse than the global financial crisis.

The state of play: "If you think about the situation going into the financial crisis, I would say all things being equal there was clearly a better ability to react economically … in Europe and in Japan and also in the U.S.," Thomas Holzheu, Americas chief economist at reinsurance giant Swiss Re, tells Axios.