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Moody's has revised its growth forecasts downward for 2020 amid the coronavirus pandemic, as it also said that it expects Turkey's economy to be hit the hardest.
According to Moody's, the unprecedented shock to the global economy caused by the pandemic will likely take a large toll on Turkey’s tourism-related sectors through the summer.
In its Global Macro Outlook 2020-21, Moody's said that it revised its 2020 growth forecasts downward for all G-20 economies, with the exception of Saudi Arabia (A1 stable), where the decision to increase oil production to 12 million barrels a day until June, will support GDP growth in 2020.
"In other emerging market countries, a sharp reduction in GDP in the second quarter is inevitable, reflecting both domestic restrictions and a steep fall in external demand," it said.Fall in oil prices to benefit Turkish economy, Erdoğan says in coronavirus meeting
"We expect Turkey’s [B1 negative] economy to be hit the hardest, with a cumulative contraction in second- and third quarter GDP of about 7.0%," it added.
Moody's said its expecting G-20 real GDP to contract by 0.5%, followed by a pickup to 3.2% growth in 2021. In November last year, before the emergence of the coronavirus, Moody's was expecting G-20 economies to grow by 2.6% in 2020.
"The G-20 economies will experience an unprecedented shock in the first half of this year and will contract in 2020 as a whole, before picking up in 2021," it said.
Moody's also said that business activity will likely fall sharply across advanced economies in the first half of 2020, projecting a cumulative contraction over the first and second quarters of 2020 of 5.4% in Germany (Aaa stable), 4.5% in Italy (Baa3 stable), 4.3% in the US (Aaa stable), 3.9% in the UK (Aa2 negative) and 3.5% in France (Aa2 stable).
"Although supportive fiscal and monetary policy measures will likely aid recoveries with above-trend growth in the subsequent quarters and in 2021, the output loss in the second quarter is unlikely to be recovered," it said.Turkey’s coronavirus death toll jumps to 59, as confirmed cases increase to 2,433
Regarding China, the company said that it forecasts the country's real GDP growth of 3.3% in 2020, followed by 6.0% growth in 2021.
In emerging market countries, a sharp reduction in GDP in the second quarter is also inevitable especially where strict containment measures have been imposed, according to Moody's.
"Recoveries in many of the emerging market economies will likely be relatively more muted than those in advanced economies and China," it added," it said.
"A general lack of social safety nets, a weaker ability to provide adequate support to businesses and households, and inherent weaknesses in many of the major emerging market countries will amplify the impact of the shock," it added.