World Economy Forecast to Grow Minus 3% in 2020
The International Monetary Fund (IMF) has forecast that the global economy will grow minus 3 percent this year as the world has been put in a great lockdown due to the spread of COVID-19.
The IMF presented the grim outlook in its biannual World Economic Outlook on April 14.
"Now this is a downgrade of 6.3 percentage points from January 2020, a major revision over a very short period of time. This makes the great lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis," said Gita Gopinath, economic counselor and director, Research Department, IMF.
The forecast is based on the assumption that the pandemic and required containment peaks in the second quarter in most countries in the world, and then recede in the second half of this year.
The IMF presented a more adverse scenario as the pandemic may not recede in the second half of this year, leading to longer containment periods, worsening financial conditions, and further breakdowns in global supply chains. "In such cases global GDP will fall even further by additional 3 percent in 2020; and if the health crisis rolls over in 2021 it can reduce level of global GDP by an additional 8 percent compared to the baseline," the IMF official said.
She estimated the cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis, even under the baseline scenario, could be around US$9 trillion, greater than the economies of Japan and Germany combined.
The IMF projects a contraction of one-point-two percent for South Korea and a six-point-one percent shrinkage for advanced economies this year.