Global economy will contract in remaining period of 2020 due to the crippling coronavirus crisis and global GDP losses are forecast at staggering USD nine trillion (2020-2021), the International Monetary Fund forecast.
However, the world economy may slightly recover by June in case ferocity of the pandemic tapered off and its spread receded, where nations would be encouraged to lift crippling restrictions on the economies, said the IMF in a report about economic forecast.
Many businesses throughout the globe have come to a standstill due to the mushrooming virus that spreads largely due to close social interactions.
The economies are expected to contract by -3 percent, much worse as compared to the proportion of the 2008-2009 global economic crisis.
This is a crisis like no other, the IMP report says, and there is substantial uncertainty about its impact on people’s lives and livelihoods.
Effectiveness of containment measures, and the development of therapeutics and vaccines, all of which are hard to predict.
Moreover, many countries now face multiple crises, a health crisis, a financial crisis, and a collapse in commodity prices, which interact in complex ways.
Policymakers are providing unprecedented support to households, firms, and financial markets, and, while this is crucial for a strong recovery, there is considerable uncertainty about what the economic landscape will look like when we emerge from this lockdown.
Under the assumption that the pandemic and required containment peaks in the second quarter for most countries in the world, and recedes in the second half of this year, “we project global growth in 2020 to fall to -3 percent.
This is a downgrade of 6.3 percentage points from January 2020, a major revision over a very short period. This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis.”
Assuming the pandemic fades in the second half of 2020 and that policy actions taken around the world are effective in preventing widespread firm bankruptcies, extended job losses, and system-wide financial strains, “we project global growth in 2021 to rebound to 5.8 percent.”
This recovery in 2021 is only partial as the level of economic activity is projected to remain below the level “we had projected for 2021, before the virus hit.”
The cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around nine trillion dollars, greater than the economies of Japan and Germany, combined. a lot depends on the epidemiology of the virus, the