The global economy this year is expected to experience the worst recession since the 1930s due to the CCP Virus pandemic, the International Monetary Fund (IMF) said in its latest forecast released on Tuesday, April 14.
In the April World Economic Outlook, IMF projects the global growth would fall to -3% in 2020, contrary to the January report when the fund forecast the world’s economy would expand 3.3% this year.
It would also dwarf the 0.1% contraction in 2009 during the financial crisis.
The IMF said the world has changed dramatically in the past three months as “a rare disaster, a coronavirus pandemic” has forced countries to implement necessary quarantines and social-distancing practices to contain the pandemic, and “the world has been put in a Great Lockdown.”
As a result, the collapse in economic activity is “unlike anything experienced in our lifetimes.”
According to the Washington-based organization, many countries now face multiple crises—a health crisis, a financial crisis, and a collapse in commodity prices, which interact in complex ways.
Though policymakers around the world are providing unprecedented support to households, firms, and financial markets, there is considerable uncertainty about what the economic landscape will look like when the world emerges from this lockdown.
Assuming that the pandemic and required containment would peak in the second quarter for most countries, the IMF said it now downgrades the global growth by 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,” the IMF said in its report.
However, the fund expects the “global growth in 2021 to rebound to 5.8%,” assuming the pandemic fades in the second half of this year and that policy actions taken around the world are effective in preventing widespread firm bankruptcies, extended job losses, and systemwide financial strains.
IMF estimated that “the cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around 9 trillion dollars, greater than the economies of Japan and Germany, combined.”
The organization predicted that the advanced economies would shrink 6.1% this year, while emerging markets and developing economies would contract 1%.