What You Need to Know

The global economy faces a massive near-term hit from coronavirus-related lockdowns and social distancing, spurring unprecedented policy measures. They won’t prevent the fearful near-term hit, but they can help lay the foundations for recovery—once the public-health crisis has passed.

Key Forecast Trends

  • Early indications confirm that the hit to the global economy from measures to contain the coronavirus is likely to be unprecedented. We have lowered our global growth forecast to –4.6%, roughly twice as big as the decline seen in 2009.
  • Next year, we expect the global economy to rebound by 5.1%. That looks very much like a good, old-fashioned V-shaped recovery. But looks can be deceiving, and next year’s rebound masks a permanent hit to output of roughly five percentage points.
  • Moreover, even this estimate depends on the effectiveness of policies to support vulnerable household and firms—and the extent to which the virus can be contained as lockdowns are lifted.
  • A key risk to our forecast is a second wave and another lockdown. We’re hopeful that this can be avoided—partly because we expect current lockdowns to be lifted only very gradually in most countries. But risks remain, and a second lockdown would lead the global economy down a materially worse path.
  • The economic cost of the crisis won’t be measured in just output and jobs. It will also place a huge strain on public-sector balance sheets: the government debt/GDP ratio for developed economies is likely to rise by roughly 20 percentage points this year.
  • That’s where central banks come in. If bond yields rise, many governments won’t be able to provide the financial support their economies need. So central banks won’t allow this to happen, and will keep bond yields pinned close to, or below, zero.


  • We have lowered our 2020 global growth forecast further to –4.6% from –0.7%. Risks to this forecast look more evenly balanced than a month ago when they were heavily skewed to the downside.
  • The US and euro-area economies are expected to contract by 5.5% and 10.0%, respectively, this year, while China is expected to expand by 1.1%. The big difference between the forecasts is largely explained by the relative severity of the economic lockdowns needed to contain the spread of the virus—but also by fiscal stimulus.
  • We see global growth rebounding to 5.1 % in 2021. This will depend crucially on the effectiveness of policies to dampen the economic impact of the lockdowns and the extent to which the virus can be contained as those lockdowns are lifted.
  • Central banks have moved quickly to relaunch quantitative easing (QE) programs to allow governments to support their economies without putting upward pressure on bond yields. We expect yields to remain close to current record lows.

Past performance, historical and current analyses, and expectations do not guarantee future results. There can be no assurance that any investment objectives will be achieved. The information contained here reflects the views of AllianceBernstein L.P. or its affiliates and sources it believes are reliable as of the date of this publication. AllianceBernstein L.P. makes no representations or warranties concerning the accuracy of any data. There is no guarantee that any projection, forecast or opinion in this material will be realized. Past performance does not guarantee future results. The views expressed here may change at any time after the date of this publication. This document is for informational purposes only and does not constitute investment advice. AllianceBernstein L.P. does not provide tax, legal or accounting advice. It does not take an investor’s personal investment objectives or financial situation into account; investors should discuss their individual circumstances with appropriate professionals before making any decisions. This information should not be construed as sales or marketing material or an offer or solicitation for the purchase or sale of any financial instrument, product or service sponsored by AB or its affiliates.

The views expressed herein do not constitute research, investment advice, or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.

MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

Clients Only

The content you have selected is for clients only. If you are a client, please continue to log in. You will then be able to open and read this content.