The International Energy Agency (IEA) in its Global Energy Review 2020 said that global energy demand recovery would depend on how long the lockdown measures will last. The pandemic has frozen the large part of the world’s economy which in turn, destroyed demand for energy. Although some energy uses such as household gas and electricity increased, overall energy demand declined in the first quarter of 2020, in line with the decline of GDP.
In an ideal scenario, effective suppression of the virus allows a limited duration of lockdown and a quick lifting of lockdown, which result in rapid, V-shaped economic recovery. Under this scenario, the IMF projected that global GDP would contract by only 3.0% in 2020. However, restrictions can last for months, and social and economic activities resume only gradually, resulting in a U-shaped economic recovery. Under these assumptions, global GDP is expected to shrink by 6% in 2020.
There also lies a possibility of a far worse scenario in which lifting the lockdown leads to a spike of new COVID-19 cases and triggers a new wave of infections. Governments will be forced to prolong or repeat their containment measures which in turn gives a negative impact on the energy market.
