UN says world economy may shrink by almost 1 percent in 2020

UNITED NATIONS — The United Nations says the global economy could shrink by almost 1 percent this year because of the coronavirus pandemic instead of growing at a projected 2.5 percent.

A new report from the U.N. Department of Economic and Social Affairs on Wednesday warned that world output could contract even further from this year’s 0.9 percent forecast if restrictions on economic activities extend to the third quarter of the year, and if fiscal responses fail to support income and consumer spending.

The report said the negative effects of current economic restrictions in richer developed nations will soon spill over into developing countries which will see lower trade and investment.

The severity of the economic impact — whether a moderate or deep recession — will largely depend on the duration of restrictions on the movement of people and economic activities in major economies, and the size and impact of fiscal responses, it said.

U.N. Undersecretary-General for Economic and Social Affairs Liu Zhenmin said: “Urgent and bold policy measures are needed, not only to contain the pandemic and save lives, but also to protect the most vulnerable in our societies from economic ruin and to sustain economic growth and financial stability.”