A recession is seen as an economic downturn due to a sustained lack of demand in the market. The coronavirus pandemic has already disrupted economies across the globe; if it is not stopped in its tracks, a recession of severe proportions is the only likely outcome in the near future.

In fact, Morgan Stanley fears a severe recession as early as the first half of 2020 with demand falling and supply chains disrupted.The coronavirus pandemic has triggered a wave of economic disruptions across the globe, threatening in its wake a long-standing recession. Morgan Stanley is expecting the global growth rate to contract by 2.3 per cent over the previous year.

Chetan Ahya, chief global economist at Morgan Stanley Research, has said the bulk of the economic pain could be concentrated in the first half of 2020, if one assumes that the Covid-19 outbreak peaks by April-May. Given the aggressive policy responses across the world, growth is expected to recover to 1.5 per cent year-on-year in the fourth quarter of the fiscal.

“Global growth for full-year 2020 will still see a decline of 0.6 per cent year-on-year, past the 0.5 per cent year-on-year rate of contraction we saw during 2008 and, on our estimates, the weakest pace of growth during peacetime since the 1930s,” the report says.

“At its core, the outbreak represents a substantial shock to incomes, and the impact on aggregate demand will ultimately create renewed disinflationary pressures,” Ahya wrote.

What Morgan Stanley is saying here is truly worrisome. The hint here is about a sustained global recession that the world hasn’t seen during peacetime in the history of the industrialised market. Ahya, however, finds a silver lining in the coordinated policy responses with interest rates across the globe moving south almost in sync.

For the International Monetary Fund, however, the call to action is now. On March 27, after a meeting of its financial committee representing 189 countries, the Managing Director of the IMF, Kristalina Georgieva, declared a state of global recession and called for reinforcing its war chest by doubling it. She, however, optimistically declared a recovery in 2021.

Be that as it may, it’s clear that a recession, given the circumstances, is already on us. So, the issues are: a) the quantum of the setback, b) the period of the recovery.

The higher the quantum of setback, the greater will be the period of recovery. The question right now is how to tide over the difficult time. How to achieve it remains the big question. But one thing is undeniable – the only way to tide over the crisis is to stick together and abide by the government’s advice.