Analytics, Banks, Economics, EU – Baltic States, Financial Services

The existing signs, including a drop in the number of travelers, disrupted supplies from China, etc, show that global growth will be the slowest since at least 2009, Nerijus Maciulis believes.

"It’s still likely to be growth and it should stand at around 1.5%, which is half of what it was in 2019 when the global GDP expanded by 3%. (…) The most likely scenario is still a short-term shock in the first half, which will considerably cut the whole year's growth tendency but will not evolve into the 2008-2009 global crisis," Maciulis said.

It's still realistic to expect more of economic activity in the second half, i.e., when quarantines are lifted and the number of travelers grows and internal demand is no longer suppressed due to closed restaurants. Therefore, a short-term shock should be followed by fairly fast growth.

"We have the measures, and the money, and we only need wise will in this situation not to let it evolve into a major global crisis, but instead limit itself to a short-term economic shock," the economist said.

If the spread of the coronavirus is not halted over the next several months and it continues to spread, then economic consequences might be deeper and take longer, and "lead to a higher unemployment level, and in this case we would have to speak about global economic downturn".

Some economies, however, risk plunging in to a short-term recession, Maciulis says.

"A recession is defined as a period of the GDP shrinking for two consecutive quarters. Such a scenario is possible. The first two quarters in China, the US and many ES countries, they will see what's called technical recession. So the US, Italy, Germany, for example, might find themselves in a technical recession but that doesn’t mean it will evolve into a large-scale long-term economic downturn," the economist said.

Over 126,500 coronavirus cases have been confirmed worldwide, and over 4,600 people have died. Three cases have been confirmed in Lithuania.