#IMF; #DeepRecessionPredicted; #GDP; #Covid19Pandemic
In the shadow of the COVID-19 pandemic and its continuing impact, the global economy could see a “somewhat less severe, though still deep” recession through 2020, the International Monetary Fund (IMF) has projected in its latest global economic outlook.
The revision is driven by better-than-anticipated second-quarter gross domestic product (GDP) in large advanced economies, the IMF reported on Monday, noting also stronger than expected growth in China and signs of a more rapid recovery in the third quarter.
Collectively these actions have so far prevented a recurrence of the financial catastrophe of 2008–09 — Gita Gopinath, IMF
Out-turns would have been much weaker if it weren’t for sizable, swift, and unprecedented fiscal, monetary, and regulatory responses that maintained disposable income for households, protected cash flow for firms, and supported credit provision”, Gita Gopinath, Economic Counsellor and Director of Research at IMF, said in a foreword to the report.
“Collectively these actions have so far prevented a recurrence of the financial catastrophe of 2008–09”, she added.
Global growth forecast at -4.4%
According to the report, with the COVID-19 pandemic continuing to spread, many countries have slowed reopening, and some are reinstating partial lockdowns. While the recovery in China has been faster than expected, the global economy’s long ascent back to pre-pandemic levels remains strewn with obstacles.
Global growth is now projected at -4.4 percent in 2020, a less severe contraction than forecast in IMF’s June update.
In 2021, global growth is projected at 5.2 percent, a little lower than in the June update, reflecting the more moderate downturn projected for 2020.
Following the contraction in 2020 and recovery in 2021, the level of global GDP in 2021 is expected to be a “modest” 0.6 percent above that of 2019, said the report, adding that the growth projections imply wide negative output gaps and increasing job losses this year and in 2021, across both advanced and emerging economies.