Initial data from China for January and February this year show industrial production fell by 12.3% year-on-year - four times the forecast decline - the ratings agency said.
And with Europe and the US following a similar path, currently increasing wide-ranging restrictions on people’s activity, the S&P economists predict a collapse in demand that causes global GDP to fall “sharply” in the second quarter of the year.
Their new forecasts suggest the world economy will grow by just 1-1.5% in 2020.
“It is difficult to measure how much output will be permanently lost as a result of COVID-19,” S&P said in its newest global update.
“While the focus now is rightly on containing the virus and measuring its downside effects, the strength of the eventual recovery will depend crucially on how much output can be replaced.”
Although the spread of the virus appears to be stabilising in large parts of Asia, including China, “much of the economic damage has already been done”, the agency said.
S&P now projects growth of between 2.7% and 3.3% in China in 2020 - down from 6.2% in 2019, which was already low for the east-Asian superpower after a protracted trade war with the US.
And in the eurozone, which has become the epicentre of the pandemic in the past few weeks, already weak growth is expected to turn negative, with S&P projecting a 0.5-1% contraction this year.
The agency said the US should expect “marginally” negative growth in the first quarter, but a “big hit” of about -6% year-on-year growth in the second.
Governments are desperately trying to ward off the economic impacts of the pandemic, with huge measures announced in Europe and the US in recent days - and the promise of more to come.
