COVID crisis sinks global economy in 2020, collapsing GDP 4.9%: IMF
Washington: The global coronavirus pandemic has sparked an economic “crisis like no other,” sending world GDP plunging 4.9 percent this year and wiping out $12 trillion over two years, the IMF said Wednesday.
Worldwide business shutdowns destroyed hundreds of millions of jobs, and major economies in Europe face double-digit collapses.
The prospects for recovery post-pandemic - like the forecasts themselves - are steeped in “pervasive uncertainty” given the unpredictable path of the virus, the IMF said in its updated World Economic Outlook.
“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast,” the fund warned.
While businesses are reopening in many countries and China has seen a bigger rebound in activity than expected, a second wave of viral infections threatens the outlook, the report said.
World GDP is expected to rebound by just 5.4 percent in 2021, and only if all goes well, the IMF warned.
Poor most vulnerable
IMF chief economist Gita Gopinath said under current forecasts, the crisis will destroy $12 trillion over two years, and cautioned, “we are not out of the woods.”
“Substantial joint support from fiscal and monetary policy must continue for now,” Gopinath said in a blog post.
The downturn is particularly damaging for low-income countries and households, and threatens to endanger the progress made on reducing extreme poverty, the Washington-based crisis lender said in its report.
The fund made drastic downward revisions to most of the April forecasts made in the early days of the pandemic, and IMF economists fear the coronavirus will leave lasting scars on employment, businesses and trade.
Hanging over the predictions is the bill for massive government stimulus plans, which were fueled by extremely low interest rates and likely prevented the recession from turning into a depression even as they created huge and ever-increasing debt levels. - AFP