The World Economy in 2020: A Nowcast

We live in nonlinear times.

2020 is set to be the worst year since the concept of GDP was implemented in a robust fashion after 1953. Suddenly we see a drop of global GDP of more than 3% according to the IMF's World Economic Outlook (April 2020) because of the Covid-19 pandemic.

The implications for global companies are immense. The nowcast reinforces the ongoing shift of resources to emerging countries. It also shows that consumer and business propositions need to be rejigged, and that there will be a need to downsize.

In short, a fundamental shift of strategies is called for. It is not a matter of only changing tactics temporarily.

I present the same graphs as I have shown the last few years.

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Global GDP growth will likely contract 3.2% in 2020, more than a 6 percentage points drop to 2019. 2020 is almost 9 percentage points below the record year 2007.

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Emerging and developing countries will do relatively well. This is similar to the 2008-2009 recession. Still, the magnitude of this recession is much larger even for those countries. No affluent country will avoid a recession.

Additional observations from my entire data set for 2020 compared to 2019:

  • Affluent countries are set to decline 5.9% while emerging and developing countries decline 0.8%
  • Regionally, Europe declines 6.8% followed by Oceania 6.6%, Northern Amercia 5.9%, Latin America and Caribbean 5.4%, Africa 2.0%, and Asia 0.5%.

These numbers differ ever so slightly from the IMF's summary because of different classifications.

Finally, I changed the banner at the top from a cheerful colorized map to a dull black & white map.