Paris (AFP)
G7 central bankers and finance ministers will speak on the phone on Tuesday to coordinate their response to the impact of the new coronavirus, which threatens to brutally dampen the global economy.
According to the OECD, global growth should not exceed 2.4% this year, and the global economy could even experience a recession in the first quarter due to the epidemic.
In November, the OECD still estimated the increase in global gross domestic product (GDP) at 2.9% this year, a level that was already the lowest since the 2008-2009 financial crisis.
The OECD, the first major international institution to publish a forecast of the economic impact of the epidemic, specifies that its main scenario is that of a health crisis reaching its peak in China during the first quarter of 2020 and for which households in d other countries remain contained.
But a more sustainable and widespread epidemic would halve global growth this year, which could then fall to 1.4%, warns the organization.
To avoid this catastrophic scenario, the central bankers and finance ministers of the G7 will meet on Tuesday by phone to coordinate their action. According to the United States Department of the Treasury, this meeting will take place at 12:00 GMT.
As of Monday evening, the president of the European Central Bank (ECB) Christine Lagarde announced that she was "ready to take the appropriate measures". The Governing Council will discuss "March 12" at its traditional monetary policy meeting, according to a source close to the ECB.
- What measures? -
In this singular context, since central banks usually react to financial crises rather than an epidemic with uncertain consequences, analysts are considering several hypotheses: a further drop in the rate applied to bank deposits, increase in the monthly rate of redemptions of assets resumed in November, giant loans to banks on very favorable terms.
On the British side, the Minister of Finance also said he was "ready to announce the future support that will be necessary". And in Australia, the central bank on Tuesday lowered its key rate by a quarter of a point to 0.50%, a historically low level.
Already on Friday, the president of the American Federal Reserve (Fed) had assured that the institution stood ready to intervene if necessary.
After the steepest drop in Western stock market indexes in 12 years last week, markets are now expecting central banks to step up to the plate.
Wall Street also rebounded spectacularly Monday evening, the Dow Jones ending up 5.09%. And if the trend was mixed on Tuesday on the Asian stock markets, European markets also started clearly in the green.
The Bank for International Settlements (BIS) - the central bank of central banks - believes the financial system is stronger than in 2008, but warns that hopes for a rapid recovery are now "grossly unrealistic".
- An already fragile global economy -
Because China, the engine of the world economy, will see its growth reduced to 4.9% this year, if the epidemic reaches its peak before the end of March. And it will drag in its wake all the major economies, warns the OECD, with Japanese growth reduced to 0.2% and American growth to 1.9%.
For the eurozone, growth will plateau at 0.8%, and 0.9% for France, while it will be zero in Italy, the main focus of Covid-19 in Europe. German GDP will only increase by 0.3%.
China now hosts more than 20% of global industry, compared to less than 8% in 2002, a year before the SARS epidemic, while its share in global GDP has increased from 6% to more than 16 %.
The coronavirus strikes at a time when global growth is already being weakened by the trade war between the United States and China. Despite the agreement found in January by the two largest economies in the world, "customs duties between the two countries remain significantly higher than two years ago," notes the OECD.
The organization has also sharply lowered India's growth, from 6.2% to 5.1% for 2020, and from 6.4% to 5.6% for 2021, mainly due to too much corporate debt which weighs on investment.
© 2020 AFP