"Fitch Ratings now expects world GDP to contract by 3.9% in 2020, a recession of unprecedented depth in the post-war period. This is twice as large as the decline anticipated in our early April GEO (global economic outlook) update and would be twice as severe as the 2009 recession," Fitch said.

On Apr 3, Fitch had estimated that global GDP would contract 1.9% in 2020. The rating agency expects GDP growth in the eurozone to contract 7% in 2020 as the European economy has taken a severe hit from lockdowns imposed to contain the pandemic. Fitch also predicted that the GDP of the US and the UK would decline by over 10% in Apr-Jun of 2020, compared with its previous forecast of around 7% contraction in early April.

The rating agency, however, said global policy responses would help limit the extent of the collapse in economic activity due to lockdowns and aid the post-crisis recovery. "We do not expect GDP in the US and Europe to return to pre-virus levels within our 20-month forecast horizon, even on the assumption that the health crisis eases significantly in 2020 (Jul-Dec)," Fitch added.

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