We’ve had a massive asset bubble that is now crashing.

Coronavirus-led global recession will be worst since World War II: Deutsche Bank

Deutsche Bank is the latest financial institution to forecast a global recession in 2020, and its second-quarter projections call for the biggest economic contractions in nearly 80 years.

Plummeting first-quarter demand in China will initiate the global slowdown before a similar hit is seen in the eurozone and the US, the team of economists led by Peter Hooper wrote Wednesday. The coronavirus has already dragged major economies close to complete halts as quarantine orders and business shutdowns block consumer spending and leave companies rushing to shore up cash.

China will see gross domestic product slump by 31.7% in the first quarter before rocketing to 34% in the following three-month period, the economists said. The US economy will grow by just 0.6% in the first quarter before slipping into a 12.9% contraction. The anticipated declines “substantially exceed anything previously recorded going back to at least World War II,” the bank added.

Deutsche Bank’s recession scenario depicts a sharp V-shaped dip in economic growth as nations quickly rebound through the second half of 2020. Yet the difficulty in containing the coronavirus makes such estimates difficult, as increased contagion could yield a far longer hit to major economies, the bank said.