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US Economy Faces Risk of Recession on Account of Coronavirus

US Economy Faces Risk of Recession on Account of Coronavirus

Posted Monday, March 9, 2020 by
Arslan Butt • 1 min read

Global financial markets have turned extremely worried about the economic impact of the coronavirus outbreak, with the risk of a recession climbing higher at the beginning of a fresh trading week. Investors remain just concerned about the lack of clarity on the sheet extent of economic damage the spread of virus can have all around the world.

Some analysts have estimated that US stocks could fall by as much as 20% this year as more cases get confirmed stateside, even as the number of infections rise in Europe. So far, the US has reported around 450 infections and a death toll of around 19.

Deutsche Bank has forecast a drop of around 20% in SPX and a 15-20% decline across US stock markets, which could rebound once the spread of the virus is contained successfully. However, the worst case scenario has highlighted the possibility of a more significant decline, which could even drive a recession in the US economy.

Oxford Economics’ analysts expect a 35% likelihood of a recession in the US economy this year, revising their previous estimates from January of 25% upwards. All eyes will be on economic data releases from the US this week, but positive data may not offset the possibility of business disruptions caused by the rise in cases.

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