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Morgan Stanley warned investors on Tuesday that the coronavirus pandemic is fundamentally disrupting the world’s economy.
“Global recession in 2020 is now our base case,” Morgan Stanley chief economist Chetan Ahya wrote in a note. “With Covid-19 spreading in Europe and the US after hitting Asia, the disruptions and dislocations in the economy and markets will trigger a [year over year] contraction in global growth in [the first half of 2020].”
Morgan Stanley believes the U.S. government is undertaking a “strong monetary and fiscal policy response” that “will help revive global growth” in the third quarter of this year. But, overall, Ahya said global economic growth will slow to 0.9% this year, “the lowest since the global financial crisis.” The firm’s base case for global growth is -0.3% in the first quarter, -0.6% in the second quarter, 1.8% in the third quarter and 2.5% in fourth quarter.
“This time will be worse than the global recession of 2001. While…