Much has changed in the economic outlook over the last few
months. Rather than seeing a modest expansion, the world is fast
plunging into a steep downturn. The spread of coronavirus, and of
the measures put in place to stop it is having large negative
effects on financial markets and on activity. Share prices in
Europe and America have fallen by 25 to 30 per cent from their
February peaks. More importantly, output and employment are also
slumping. A deep global recession in the first half of 2020 is now
inevitable and a hoped-for sharp recovery in the second half of the
year looks less and less probable by the day.
Forecasts are, at the present time, particularly uncertain. For
one thing there is, as yet, hardly any hard data (outside China)
that provide information on how much output has been lost in
February-March (in China the losses seem to have been massive and
the first survey and labour market evidence for Europe and America
suggests similar outcomes). For
