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Global GDP shrinks 7.2% in Q2CY20; records worst fall since 1997

Real GDP in advanced economies contracted 11 per cent, while it shrank 14 per cent in E&DEs, excluding China

twitter-logoNiti Kiran | September 25, 2020 | Updated 15:05 IST
Global GDP shrinks 7.2% in Q2CY20; records worst fall since 1997
These include 19 Euro Areas countries, comprising 86 per cent of the world economy, 94 per cent of the advanced economies (AEs) and 73 per cent of emerging and developing economies (E&DEs).

Global real gross domestic product (GDP) contracted 7.2 per cent in the second quarter of 2020 from year-ago period. This was the worst fall since 1997, shows an analysis of 39 nations by Motilal Oswal Financial Services. These include 19 Euro Areas countries, comprising 86 per cent of the world economy, 94 per cent of the advanced economies (AEs) and 73 per cent of emerging and developing economies (E&DEs).

Real GDP in advanced economies contracted 11 per cent, while it shrank 14 per cent in E&DEs, excluding China. In fact, China was the only nation in the sample of 39 nations, which posted growth in Q2CY20. Taiwan posted the slowest decline of only 0.2 per cent year-on-year (YoY), while India posted the worst decline of 24 per cent last quarter, on a yearly basis, the report added.  

Global real private final consumption expenditure (PFCE) declined at record 11 per cent last quarter while real gross capital formation (GCF) fell only 6 per cent, YoY. The real government final consumption expenditure (GFCE), however, remained stagnant.

The record decline in PFCE was not surprising amidst the economic lockdowns and social distancing practices due to COVID-19 globally. It declined in all 39 nations, ranging from -2.9 per cent in China to -28 per cent in Singapore. However, despite the massive fiscal stimulus, no growth in real GFCE was definitely shocking. Real GFCE declined 0.6 per cent YoY in AEs but grew 1.9 per cent in E&DEs, the report said. Excluding China though, real GFCE in E&DEs grew around 10 per cent YoY during the quarter.

Further, while the decline in global GCF is much lower compared to that during the great financial crisis (GFC), it is almost entirely because of 10 per cent growth in China, since it accounts for almost a third (the highest) of the global GCF. Investments shrank 15 per cent YoY in AEs and 26 per cent in E&DEs excluding CN (similar to that during the great financial crisis), the report added. 

Also read: Global GDP to reach pre-COVID levels by mid-2021, says Deutsche Bank

Also read: Global labour income estimated to have fallen 10.7% in first three quarters of 2020: ILO

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