The world economy gets a big blow this year due to the corona virus. Even if the virus does not spread, economic growth will halve. In the event of a pandemic, there is hardly any growth left, Rabobank economists write in their quarterly report.
In the most favorable scenario, the global economy is growing this year still with 1.6 percent. “That is the lowest growth since 2009, when the world was hit by the financial crisis,” says Rabobank economist Hugo Erken. The difference with 2009 is that the Chinese economy did very well at the time. At the time, the Chinese government invested heavily in, for example, construction projects, so that the country was not dragged into the crisis that hit the Western countries in particular.
China gets the hardest hits
But due to the outbreak of the corona virus in the Chinese metropolis of Wuhan, China is now hit hardest economically. Factories throughout the country are standing still, employees stay at home for fear of contamination. Aircraft and ships to and from China are also leaving very slowly. And so the Rabobank economists expect that the growth of China will be more than 3 percent lower this year due to the virus. “The growth would be the lowest in 40 years,” says Erken.
A trade country like the Netherlands is feeling the effects of the virus, according to the Rabobank figures. Economic growth is expected to halve. However, it seems that the economy will not suffer permanent damage if it is able to contain the virus somewhat. “In that scenario, we expect the number of bankruptcies to remain limited,” says Erken.