The direct economic impact of President Donald Trump’s European travel ban will be limited, but we now anticipate more aggressive measures to contain the pandemic over the next few days – with nationwide school closures, bans on large public gatherings and localised lockdowns all possible. As a result, we now expect GDP to fall by 4% annualised in the second quarter and to stagnate in the third. If such measures helped to stem the spread of the virus, however, they may reduce the risk of a worse-case scenario, in which one-third of the population become infected resulting in a prolonged recession.
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