People gathering on Wall Street in front of the New York Stock Exchange, October 25, 1929. Ullstein bild | Getty Images

Financial markets are facing their worst crisis since 1929, a veteran analyst told CNBC on Friday, as top economists downgraded their forecasts to point to an impending global recession. Even though stocks across Europe, the U.S. and Asia looked to be heading for some welcome reprieve on Friday, analyst Stephen Isaacs said the coronavirus crisis is "unprecedented" since there were already record levels of leverage and overbought stocks. "We came into this with all sorts of problems hiding within the momentum of a massive bull market, which again leads me to feel extremely concerned that the selling is only abating temporarily, and that we are still looking, unfortunately at a very, very difficult situation," the chairman of Alvine Capital Management's investment committee told CNBC's "Squawk Box Europe."

The S&P 500 has plunged by around 30% since its all-time high on Feb. 19, but Isaacs suggested there could be another 20% to go below 2,000 before the market could be considered "oversold." Isaacs said the 1929 Great Depression was the closest bear market comparison. After the stock market crash of Oct. 29, 1929, the S&P 500 fell 86% in less than three years and did not regain its previous peak until 1954. "That might coincide in mid-to-late April with some abating of the extreme lockdown in Europe, and we should from there get something like a short-covering rally," he said. "This is an unprecedented situation, this is worse than 2008, this is worse than 1987, this is the worst crisis to hit financial markets since the Great Depression."

Headed for recession

IHS Markit on Wednesday revised down its forecast for world real GDP growth in 2020 to 0.7%, as the full economic impact of the crisis becomes more apparent. Growth below 2.0% is classified as a global recession. In their March Global Economic Forecast Flash, IHS Markit chief economist Nariman Behravesh and executive director of global economics Sara Johnson projected that Japan is already in recession, while the U.S. and Europe will follow in the second quarter. U.S. real GDP is now expected to fall by 0.2%, the euro area by 1.5% and Japan by 0.8%, while China, where the virus originated, is projected to see a slowdown in growth from 6.1% to 3.9%.