Industrial output shrank sharply across the world in March in the wake of rising coronavirus pandemic cases and it subsequently upset the global economy as more countries declared lockdowns to contain the virus.
On 31 March, a latest UN trade report said that the world economy would go into recession this year with a predicted loss of trillions of dollars of global income due to the coronavirus pandemic, spelling serious trouble for developing countries with the likely exception of India and China.
With two-thirds of the world's population living in developing countries facing unprecedented economic damage from the COVID-19 crisis, the UN is calling for a $2.5 trillion rescue package for these nations.
Last month, the International Monetary Fund (IMF) had said that COVID-19 led the global economy into recession, reported Reuters.
IMF managing director Kristalina Georgieva had said that there was immense pressure on emerging markets suffering from lost commerce, reduced exports and massive capital outflows.
Georgieva further said that emerging market countries need at least $2.5 trillion in financial resources to get through the pandemic.
Amid reports of slight recovery in China last month, manufacturing activities contracted in the United States and other parts of the world in March, dragged down by economic fallout from the coronavirus outbreak, reported AP.
The Institute for Supply Management, an association of purchasing managers, reported Wednesday that its US manufacturing index fell to 49.1 in March after registering 50.1 in February.
Any reading below 50 signals a contraction. The index had signalled growth in January and February.
Also Wednesday JP Morgan reported that global manufacturing shrank in March. Its worldwide manufacturing index registered 47.6 in March.
That was a slight improvement on February's 47.1 " but only because Chinese factories began ramping back up last month after being locked down in February to counter COVID-19. Excluding China, JP Morgan found, global manufacturing dropped to the lowest level last month since May 2009 at the depths of the Great Recession.
Economists had expected a bigger drop in the US index. Timothy Fiore, chair of ISM manufacturing index committee, said that "things got worse'' as March dragged on and predicted that the index will signal more weakness in April.
New orders and factory employment fell last month to the lowest level since 2009. Production and export orders also fell.
The COVID-19 pandemic and the quarantines, travel restrictions and business closings imposed to combat it have hammered global manufacturers, disrupting their access to supplies and crushing demand for their products.
But the impact of the outbreak is falling even harder on service businesses such as restaurants and hotels.
"Manufacturing is not, for the most part, in the very front line of the virus hit, but nonetheless large swathes of the sector are vulnerable as consumers cut back on spending on goods, especially big-ticket items like cars and trucks," Ian Shephardson, chief economist at Pantheon Macroeconomics, wrote in a research report, adding that "while this headline ISM reading is a pleasant-looking surprise, don't be fooled.''
Ten of 18 US industries surveyed reported growth in March, but six contracted, led by energy companies, coal producers and textile mills.
Already weakened by President Donald Trump's trade war with China, manufacturers around the world are reeling from COVID-19 and its economic impact. JP Morgan reported that its manufacturing index for the 19 European countries that share the euro currency dropped last month to the lowest level in nearly eight years.
Confidence among eurozone manufacturers fell to a record low. Manufacturing in the Philippines dropped to the lowest level on record as authorities locked down Luzon, the country's biggest and most populous island, to combat COVID-19. JP Morgan also reported that Italy, the Czech Republic and Vietnam registered especially deep manufacturing contractions last month.
Last month, IMF officials had said in a blog on the economic impact of the pandemic that China's economy was beginning to show some signs of normalisation after the full-blown shock caused by coronavirus but stark risks remained, reported Reuters
Most larger Chinese firms have reopened and many local staff have returned to work but infections could rise again as national and international travel resumes, the officials said.
In February this year, industry body PHDCCI had said that the coronavirus outbreak might negatively impact global growth by 30 basis points or $250 billion.
PHDCCI President D K Aggarwal said disruptions in the global supply chains will not only hit China's exports but also the exports of the importing countries as they import a large chunk of raw materials and intermediate goods from China while exporting to other respective destinations.
--With inputs from agencies