Coronavirus’ recessionary impact on global industry
Oxford Economics has updated our quarterly global industry forecasts on an interim basis as the worldwide spread of the coronavirus has led to a severe deterioration in economic conditions. We now expect global industrial production to fall sharply in H1 2020 and to contract by 2% for the year.
Lockdowns and social distancing measures have been damaging for service sectors reliant on “social consumption” such as tourism and hospitality. The disruption is also spreading to manufacturing. In recent weeks, the auto sector has seen its most extensive factory shutdowns since WWII in response to weak demand, supply-chain bottlenecks, and coronavirus containment measures.
Despite the sharp deterioration in the near-term outlook, we expect a strong recovery towards the end of 2020 and into 2021 as lockdowns end, social distancing measures ease, consumer and business spending resumes, and massive policy stimulus kicks in.
However, the unprecedented and fast-changing nature of this crisis leaves a significant uncertainty around our baseline forecasts. We have therefore updated our coronavirus downside scenario, which models the impact of further economic disruption due to the pandemic. This scenario results in a severe global industrial recession, with industrial production falling 3% in 2020.