S&P revises US growth forecast to 1% amid epidemic

A fast-spreading virus outbreak is likely to hit the U.S. economy longer worse than anticipated, according to the S&P Global Ratings on its cut on the global forecast on Tuesday.

The Organisation for Economic Cooperation and Development warned that the epidemic has plunged global economy to its worst activity since the 2008 financial crisis. The organization called on central banks and governments to counter a potential deeper fall.

In an attempt to protect the world’s biggest economy from the virus outbreak, the U.S. Federal Reserve cut interest rates by half a percentage point to hit 1.00%-1.25% target range. On Tuesday, the Australian central bank also cut interest rates to a record low 0.5%.

S&P revised its U.S. GDP growth in the first quarter to 1% from 2.2% forecast before the epidemic, accompanied by recovery in the following quarters. S&P also estimated second-quarter growth to hit nearly 1%.

The impact to U.S. economy’s growth would reflect in five main channels: tourism and travel disruption, weakened global demand and demand from China, lower supply chains, weak commodity spending, and low commodity prices.