A pandemic-driven global recession is becoming more likely by the day as the flow of goods, services and people face ever-increasing restrictions and financial markets slump. In just the past day or so, President Donald Trump curbed travel to the U.S. from Europe, Italy’s government ordered almost every shop to close, India suspended most visas and Ireland partially shut down. Twitter Inc. joined companies telling employees to work at home and the National Basketball Association suspended its season.
While such announcements are aimed at containing the coronavirus, each quarantined city, canceled flight, scrapped sporting event and scuppered conference will hammer demand this quarter and likely longer. An initial consumer rush to stock up on supplies may be followed by months of cautious restraint. Investors are sounding the alarm that policy makers aren’t doing enough, with a deepening rout in global stocks and strains in credit markets compounding the concern over the economic outlook. Stocks were primed for more heavy losses in Asia on Friday after the worst Wall Street session since 1987.
The virus “has disrupted the global economy and has quickly morphed into a dislocation in financial markets too,” Morgan Stanley economists led by Chetan Ahya said in a report to clients in which they warned of a “rising risk” of a full-blown global recession.