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Coronavirus outbreak to significantly affect economic output across major economies: DBRS Morningstar

Our Bureau Mumbai | Updated on March 24, 2020

The coronavirus outbreak and associated public health response will impose a significant cost in terms of lost economic output across the major economies, said Canadian credit ratings DBRS Morningstar on Tuesday.

Governments and central banks are implementing targeted, timely and temporary measures to support affected businesses and households, the rating agency said in a press statement.

Although the immediate impact of social distancing and widespread travel restrictions cannot be fully offset in the near term, the cumulative effects of these measures to support a relatively more robust economic recovery beginning later in 2020. Although the impact on some sectors may take some time to fully reverse, the most severe slump in demand will most likely be limited to a few quarters, the agency said.

The agency added that most of the advanced economies have space to implement temporary stimulus measures without an adverse impact on their ratings. “On the other hand, the likelihood of further imminent upgrades has clearly diminished. Over time, fiscal policy can be subsequently tightened in most countries to restore flexibility to respond to future shocks. While geographies, sectors and households will experience varied impacts, overall DBS views the ongoing government and central bank measures as beneficial to soften the blow,” the agency added.

Published on March 24, 2020

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