The recent surge of coronavirus cases outside of China is a rising risk to global economies and credit markets. Shaken confidence in financial markets exacerbates the impact.

With COVID-19 now present in more than 70 countries, the global macro impact has doubled since our last update on February 11. We estimate it will now take 0.5 percentage points (ppt) off our 3.3% GDP growth baseline (from December 2019). This depends on the assumption that the epidemic will subside during the second quarter of the year. We now estimate that China’s 2020 GDP growth could be lower by 0.9 ppt to 4.8% this year; and the euroarea by 0.5 ppt and Italy, by about 0.7 ppt. Growth in the more-insulated U.S. economy is expected to be lower by 0.3 ppt.