Banking/Financial Institutions

Bank of America warns of worst year for global economy since financial crisis

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Bank of America is warning that global economic growth in 2020 will likely be the worst the U.S. has seen in years, at least since 2009, in part because of the coronavirus outbreak.

Bank of America Global Research predicts the growth of gross domestic product (GDP) globally could fall to 2.8 percent for 2020, which would be the first sub-3 percent reading since the conclusion of the financial crisis in the second quarter of 2009, according to a CNBC report.

The research suggests the recent outbreak of the coronavirus plays a significant factor in global economic activity, as more industries are affected by delays as the virus spreads.

Economists from the Bank of America research group also point to the U.S.-China trade war and political uncertainty as slowing growth.

Bank of America’s studies indicated that disruptions in global supply chains stemming from the coronavirus outbreak could lower GDP growth, as well as a weaken tourist flow to and from Asian countries.

“Limited outbreaks, similar to the one in Italy, are possible in many countries, leading to more quarantines and weighing on confidence,” Bank of America economist Aditya Bhave said. 

“The upcoming Presidential elections add another layer of complexity, as U.S. trade policy would probably change significantly under a Democratic President,” Bhave said. “Business investment is likely to remain tepid until there is greater clarity on the rules of the game.”

China has seen a slowdown in its growth at 5.2 percent in 2020, down from 5.9 percent in 2019. Global GDP, excluding China, is predicted to rise 2.2 percent, also a record low since the recession, according to the report.

The Bank of America firm is not suggesting another recession is around the corner, despite the bad news.

Tags Economic growth economy Gross domestic product
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