Coronavirus crisis could cost the world $2 trillion, says UN.

Sputnik Brazil - UN economists warned on Monday that the outbreak of the new and deadly coronavirus could cost the global economy between US$1 and US$2 trillion this year and urged governments to increase spending to mitigate its impact.

A report by the United Nations Conference on Trade, Investment and Development (UNCTAD) concluded that the COVID-19 pandemic will push some countries into recession and significantly slow the growth of the global economy as a whole.

Indeed, the outbreak, which has already infected more than 110.000 and killed more than 3.800 people worldwide, is expected to push global economic growth well below 2,5%, "often considered the threshold of recession for the world economy," UNCTAD stated.

"We foresee a slowdown in the global economy to less than 2% this year, and this will likely cost $1 trillion" compared to the September forecast, warned Richard Kozul-Wright, head of the globalization and development strategies division at UNCTAD.

"The real question now is whether this forecast will be optimistic," he told reporters in Geneva, adding that in the worst-case scenario, up to $2 trillion could be lost.

Loss of consumer and investor confidence, slowing global demand, rising debt, and widespread market anxiety are just some of the problems clouding the global economic outlook.

The world risks suffering "widespread insolvency," warned UNCTAD, adding that "a large and sudden collapse in asset values ​​that would mark the end of the growth phase of this cycle cannot be ruled out."

In the most dramatic scenario, the hardest-hit economies would be those heavily dependent on exports of oil and other commodities, as well as those with close trade ties to China and other countries first affected by the outbreak, UN economists have found.

The duration and depth of the crisis will depend on the extent of the virus, the time it takes to find a vaccine, the level of anxiety in the population, and the impact of the measures taken to control the epidemic on economies, according to the report.

Given that central banks alone will not be able to tackle the crisis, UNCTAD has called for international coordination among the world's major economies.

"An appropriate macroeconomic policy response will require aggressive fiscal spending with significant public investment," UNCTAD stated, calling for infusions of cash into the relief economy as well as "targeted social support for negatively affected workers, businesses and communities."

"Governments need to spend now in time to avoid [...] a doomsday scenario in which the world economy grows by only [...] 0,5% this year," said Kozul-Wright.

In this scenario, he said, "you're talking about a $2 trillion impact on the global economy."