Bank of America (BofA) has projected that the global economy would shrink by 12% by the end of Second quarter of 2020. This was disclosed by the bank’s Economist, Michelle Meyer, as she declared that the Coronavirus-induced recession has commenced in America like every other nation across the globe.
“We are officially declaring that the economy has fallen into a recession, joining the rest of the world, and it is a deep plunge,” Meyer stated in the note.
“Jobs will be lost, wealth will be destroyed and confidence depressed.”
[READ MORE: COVID-19: 25 million will be jobless, as Recession looms)
According to the BofA, the Coronavirus-induced recession has started already and will see the world’s economy collapsing in the second quarter (Q2) by 12%, before experiencing a slight growth in Q3, 2020.
According to Meyer, the recession could get worse with the GDP for the full year shrinking by 12% followed by a “very slow return to growth thereafter” sometime in July 2020.
The Bank of America considered the labour market as an indicator of the magnitude of economic shock expected in the coming months. They expect the unemployment rate to double in the coming months, with a minimum of 1 million jobs lost in every month of the second quarter, in America alone.
“Although the decline is severe, we believe it will be fairly short-lived,” Meyer added.
Meyer noted that the respite from this situation would come from aggressive policy action and response from the government.
[READ ALSO: Nigeria could slide into recession due to Coronavirus, PEAC warns)
Why this matters: Nairametrics had reported the International Labour Organisation (ILO) study, which predicted a rise in unemployment in the coming months, which would leave as many as 25 million people jobless and many more underemployed.
On Tuesday, Morgan Stanley had said that a global recession in 2020 is now its base case, while “bond king” Jeffrey Gundlach of DoubleLine Capital has said there’s a 90% chance the United States will enter a recession by year-end.
