(Bloomberg) --

The size of the fiscal response required to counter the economic impact of the coronavirus could be as much as an unprecedented 30% of global output, according to one of Australia’s top-performing fund managers.

The most likely outcome of efforts to contain the health emergency is a near total shutdown of the world’s economy over the next two to six months, said Hamish Douglass, chairman and chief investment officer of Magellan Financial Group Ltd. This is likely to lead to a near total collapse in demand for many businesses over the period, he said in an investor update on the $58 billion asset manager’s website.

“We are unable to assess the most likely outcome at this stage, as we don’t have visibility on the scale and effectiveness of the possible fiscal and monetary responses that governments and central banks might enact,” Douglass said. “The fiscal response required to head off the worst outcomes is unprecedented and potentially could be up to 20% to 30% of GDP.”

Thirty percent of global gross domestic product would be about $26 trillion, based on International Monetary Fund estimates for last year. That’s bigger than the size of the U.S. Treasury market, which was just under $17 trillion at the end of February.

Strong Position

Many countries, especially those in emerging markets, may be unable to respond with “sufficent force,” Douglass wrote. But major countries including the U.S., China, Japan and Germany are in strong positions to respond, he said.

Magellan’s flagship $7.1 billion global equity fund has beaten 95% of peers over the last three years, according to data compiled by Bloomberg. It’s the fourth-largest investor in Starbucks Corp. and among the 20 largest investors in Alibaba Group Holding Ltd., according to data compiled by Bloomberg.

Over the past week, Magellan has increased defensive holdings in its global equity portfolio and boosted cash to around 15% from about 6%, according to the update.

“We hope that politicians and central banks will act in time and with sufficient force to prevent a devastating economic collapse,” Douglass said. “We are assessing their efforts as they announce them.”

©2020 Bloomberg L.P.