As the effects of the Covid-19 outbreak on the global economy materialize, Fitch Ratings has slashed its forecasts for 2020.

“World GDP is now expected to fall by 3.9% in 2020, a recession of unprecedented depth in the post-war period,” Brian Coulton, chief economist at Fitch, said in a statement. “This is twice as large as the decline anticipated in our early April [forecast] and would be twice as severe as the 2009 recession.”

Fitch’s revised forecasts follow the imposition of longer-than-expected lockdowns worldwide.

“Several major economies recently have extended lockdown measures, and we now need to incorporate national lockdowns of around eight or nine weeks as a central case assumption for most major advanced economies,” Fitch said.

The rating agency’s previous assumption was that lockdowns would last for about five weeks.

“An extra month of lockdown would, all else being equal, reduce the annual flow of income (GDP) by around two percentage points,” Fitch noted.

Additionally, economic data is demonstrating that the lockdowns are proving more painful than initially assumed.

Fitch said that official first-quarter estimates “point to a daily loss of activity through lockdown episodes of closer to 25% than the 20% assumed previously.”

The rating agency said that its forecasted decline in GDP would be equivalent to a US$2.8 trillion fall in global income levels relative to 2019, and a US$4.5 trillion drop in global GDP compared with its initial expectations for 2020.

Fitch now expects Canadian GDP to drop by 5.5% this year, in line with a 5.6% decline for the U.S.

Eurozone GDP is now forecasted to decline by 7% this year, which represents Fitch’s largest downward revision.

Additionally, Fitch has sharply revised its GDP forecasts for emerging markets.

“Falling commodity prices, capital outflows and more-limited policy flexibility are exacerbating the impact of domestic virus-containment measures,” the rating agency said.

“Macro policy responses have been unprecedented in scale and scope and will serve to cushion the near-term shock. But with job losses occurring on an extreme scale and intense pressures on small and medium-sized businesses, the path back to normality after the health crisis subsides is likely to be slow,” said Coulton, who added that Fitch now expects U.S. and eurozone GDP to remain below 2019 levels throughout 2021.