The UN Department of Economic and Social Affairs on Wednesday warned that the decline could be even deeper if restrictions on economic activities extend into the third quarter of the year and if fiscal stimulus efforts don't support income and consumer spending.

By comparison, it said, the world economy contracted 1.7 per cent during the global financial crisis in 2009.

"Fears of the exponential spread of the virus - and growing uncertainties about the efficacy of various containment measures - have rocked financial markets worldwide," the report noted.

In the best-case scenario, the report said, moderate declines in private consumption, investment and exports will be offset by increases in government spending in the seven major industrialised nations and China, leading to global growth of 1.2 per cent in 2020.

In the worst-case scenario, it said, global output would contract 0.9 per cent, "based on demand-side shocks of different magnitudes" to China, Japan, South Korea, the United States and the European Union as well as a 50 per cent decline in oil prices.

This scenario "assumes that wide-ranging restrictions on economic activities in the EU and the United States would extend until the middle of the second quarter", the report said.

It said increasing restrictions on the movement of people and lock-downs in Europe and North America "are hitting the service sector hard, particularly industries that involve physical interactions such as retail trade, leisure and hospitality, recreation and transportation services".

Those sectors account for more than a quarter of all jobs in those countries, and as these businesses lose revenue, unemployment is likely to increase sharply, it said.

The report said the negative effects of current economic restrictions in richer developed nations will soon spill over into developing countries, which will see lower trade and investment.

The severity of the economic impact - "whether a moderate or deep recession" - will largely depend on the duration of restrictions on the movement of people and economic activities in major economies and on the size and impact of fiscal responses, it said.

"Urgent and bold policy measures are needed, not only to contain the pandemic and save lives, but also to protect the most vulnerable in our societies from economic ruin and to sustain economic growth and financial stability," said Liu Zhenmin, the UN undersecretary-general for economic and social affairs.

The report said fiscal stimulus packages should prioritise health spending to contain the spread of the virus and should provide income support to households most affected by the pandemic.

Australian Associated Press