The global economy could post its worst year since the financial crisis as coronavirus weighs on already slowing growth, Bank of America says

• Bank of America on Thursday cut its 2020 global GDP growth forecast to 2.8%, the lowest reading since the financial crisis.
• The lowered outlook is due to already weak conditions and the impact of the coronavirus outbreak on global growth, according to Bank of America economist Aditya Bhave.
• The bank expects "lagged spillover effects" due to supply-chain and tourism disruptions, and the spread of the virus outside China, wrote Bhave.
• Read more on Business Insider.

Global growth could slow to its lowest reading since the Great Recession as coronavirus weighs on slowed momentum, according to Bank of America.

On Thursday, the bank cut its 2020 global domestic product growth forecast to 2.8%, the lowest reading since 2009 and the first under 3% since the financial crisis.

"Growth momentum was soft even before the coronavirus shock," Bank of America global economist wrote Aditya Bhave in the Thursday note. But China's aggressive quarantine measures around the virus point to a very weak first quarter for the country, he said.

Bank of America has cut its China forecast again to 5.2% from 5.6% for 2020 due to the coronavirus, and now expects "roughly zero" sequential growth in the first quarter and a more delayed recovery.

That will also likely lead to "large spillover effects" that could hurt the entire global economy, leading the bank to lower its global growth forecast excluding China to 2.2%, also the lowest rate since 2009.

"Extended disruptions in China should hurt global supply chains. Weak tourist flows will be another headwind for Asia," Bhave wrote, adding "and limited outbreaks, similar to the one in Italy, are possible in many countries, leading to more quarantines and weighing on confidence."

Bhave does not foresee a global recession or a global pandemic that would basically shut down economic activity in many major cities, he wrote. Still, the bank sees risks skewed to the downside going forward, a "more 'U-shaped' growth recovery," and greater permanent loss in output.

Other factors have also spurred the recent slowdown in global growth, Bhave wrote, including the US-China trade war and uncertainty around the upcoming US presidential elections. Still, these factors have created an "unfavorable base" for 2020 annual growth, especially in light of an event such as coronavirus, according to the note.

"This is just GDP math," Bhave wrote. "Perhaps more importantly, the weakness in the global economy left little buffer against a major shock. Unfortunately the COVID-19 outbreak is turning out to be that shock."