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March 03, 2020

Global Economy: Viral watch

  • Major central banks struck a cautious note on growth recovery amid persisting uncertainty in global events. The World Bank forecast a moderate pick-up in global growth in 2020, even as it cut growth projections for the United States (US) and euro area (EA)
  • Japan followed other major central banks in keeping interest rates unchanged. China asked banks to link new loans to external benchmark in a move aimed at interest rate liberalisation
  • The recent outbreak and spread of coronavirus sent fresh jitters across with several global agencies citing possible downside to growth if the negative impact on the Chinese economy heightens

The US and China inked phase-one of the trade deal and the United Kingdom (UK) finally Brexited in January. But no sooner had the global economy surmounted these longstandinghurdles to growth that another concern cropped up to dominate the headlines. The spread of coronavirus and its impact shook the stock markets over the last week of the month, with the outbreak spilling over international borders. Fears mounted of slowing business activity and trade hurting the Chinese economy in the near term, and consequently, impacting global economy.


Monetary policy across advanced economies remained in ‘pause’ mode as major central banks kept interest rates steady. The economies of the US, Japan, and UK are expected to be in expansionary mode in 2020, albeit moderately, by their respective central banks, even as inflation continues to undershoot targets, except in the US.