The International Monetary Fund (IMF) said in a World Economic Outlook report on Wednesday that the global economic growth is projected to shrink by 4.9 per cent in 2020. The organization slashed its previous estimate of 3 per cent contraction of the global economy from April. The latest report expects a 180-degree reversal of its previous forecast in January when it had expected a 3.3 per cent increase in the economic growth in 2020.
The Washington-based global organization estimated that the global economy might receive a $12 trillion hit this year. According to the IMF, the Covid-19 pandemic has caused an “unprecedented decline in global activity” and that the global labour market has received a “catastrophic” hit. “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 organization said in its report.
IMF said that the economic recovery in 2021 is expected to be much slower than expected – a 5.4 per cent economic growth, 6.5 per cent lower than the pre-pandemic projection of 9.9 per cent, compared to previously forecast 5.8 per cent in April. The Fund maintained that another outbreak in the forthcoming year can shrink the growth rate to 0.5 per cent.
The IMF Chief Economist Gita Gopinath said in a news conference that the global economy is expected to receive a $12 trillion blow in 2020. She said that the Covid-19 lockdown “triggered the worst recession since the Great Depression.” She also said that the living standards are expected to lower in 95 per cent of the countries of the world this year.
Gopinath further said that the advanced economies have been particularly hard hit: US economy is expected to contract by 8 per cent, the UK by 10.2 per cent, France by 12.5 per cent and Italy by 12.8 per cent.
The IMF advised all countries to ensure that their healthcare systems are adequately resourced and appealed to the advanced economies to extend a helping hand to the poor nations until an affordable vaccine is available. Multilateral cooperation is vital to mitigate the impact of the pandemic on the developing countries; the progress made in reducing the global poverty since 1990 is jeopardized, the IMF said.