The International Monetary Fund (IMF) has projected the Global output to decline by 4.9 per cent in 2020, 1.9 percentage points below the IMF’s April forecast, followed by a growth at 5.4 per cent in 2021, indicating a grimmer economic outlook as the pandemic continues to ripple across the globe, Xinhua news agency reported.
“Compared to our April World Economic Outlook forecast, we are now projecting a deeper recession in 2020 and a slower recovery in 2021,” IMF Chief Economist Gita Gopinath said in a virtual news conference on Wednesday, noting that these projections imply a cumulative loss to the global economy over two years of over $12 trillion from the crisis.
“The downgrade from April reflects worse than anticipated outcomes in the first half of this year, an expectation of more persistent social distancing into the second half of this year, and damage to supply potential,” Gopinath said.
The multilateral lender is projecting a synchronized deep downturn in 2020 for both advanced economies, and emerging market and developing economies, noting that over 95 per cent of countries are projected to have negative per capita income growth this year.
It also warns of record debt levels in both advanced and emerging markets and developing economies.
Advanced economies are projected to contract 8 percent this year, 1.9 percentage points lower than the forecast in the April WEO, according to the updated report.
The US economy is expected to shrink 8 per cent, the Euro Area is on track to contract 10.2 per cent, and the Japanese economy could decline 5.8 per cent.
Emerging markets and developing economies, meanwhile, are projected to shrink by 3 per cent this year, 2 percentage points below the April WEO forecast, the report showed.
Brazil and Mexico are projected to contract by 9.1 and 10.5 per cent respectively, while India’s economy could see a contraction of 4.5 per cent.
The latest report also showed that global growth is projected at 5.4 per cent in 2021, which would leave the 2021 GDP some 6.5 percentage points lower than in the pre-COVID-19 projections made in January 2020.
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