The international monetary Fund has exposed the economic devastation unprecedented caused by the pandemic coronavirus, lowering sharply its forecast for global growth this year.
The IMF said on Wednesday that this “crisis is not like the others” would plunge the global GDP of 4.9% this year and would surprisingly 12 trillion dollars over two years.
It is much worse than the decline of 3% it had estimated in its previous report in April.
The IMF said that the economic damage in the world caused by the recession will be worse than any other downturn since the Great Depression of the 1930s.
The index estimates of world GDP, quarterly of the IMF, with a Q1 2019 fixed to 100, is seen above
A man looks at the signs of a shop closed due to COVID-19 Niles, Illinois last month. The layoffs in the United States rose in April, revealing the deep hole of economic caused by the pandemic and the closures
The report indicates that the decline in economic activity ” is accompanied by a sudden catastrophic for the global labour market “, providing that the equivalent of 300 million jobs will be deleted in the world in the second quarter.
For the United States, he predicted that the gross domestic product of the country – the value of all goods and services produced in the United States – will drop 8% this year, even more than its estimate of April, a decrease of 5.9%.
This would be the worst annual drop of this type since the demobilization of the american economy in the aftermath of the Second world War.
China should, however, get much better, the world’s second largest economy to grow by 1% this year. China is the only country for which the IMF is forecasting growth for this year, after the country was able to quickly get out of the lock-out in the first quarter.
The IMF has published on Wednesday its forecasts more dark in an update of world economic Outlook published in April.
A store is closed near Wall Street, because the coronavirus maintains the closure of financial markets and companies last month in New York
This graph shows tax measures by countries to cope with the crisis, percent of GDP
The update is broadly in line with other major recent forecasts. Earlier this month, for example, the world Bank predicted that the global economy will decline by 5.2 per cent this year.
“This is the worst recession since the Great Depression,” said to the press, Gita Gopinath, chief economist of the IMF. “No country has been spared. “
The IMF noted that the pandemic was impacting disproportionately on low-income households, “putting at risk the significant progress made in reducing extreme poverty in the world since 1990”.
In recent years, the proportion of the world population living in extreme poverty, equivalent to less than $ 1.90 per day – had fallen below 10% compared to over 35% in 1990.
However, the IMF said that the crisis of the COVID-19, it threatens to undo this progress. It is estimated that over 90% of the market economies in developing and emerging will be a decline in the growth of per capita income this year.
For 2021, the IMF envisages a rebound in growth, as the pandemic viral will not explode in a second wave of major. It is expected that the world economy increased by 5.4% next year, 0.4 percentage point less than in April.
For the United States, the IMF expects growth of 4.5% next year, 0.2 percentage point less than in its forecasts of April.
This gain would not be sufficient to restore the us economy to its level before the outbreak of the pandemic.
The association of economists which has officially dated the recession in the United States has determined that the economy was in a recession in February, with tens of millions of people redundant, closures imposed to contain the virus.
Growth forecasts of the IMF for 2019-2021 for the regions of the world and some countries
The u.s. government has estimated that the country’s GDP had declined at an annual rate of 5% during the quarter from January to march, and it is expected to widely dip to a rate of 30% or worse during the period of April to June.
In its updated forecasts, the IMF has revised downward the growth of all the major countries. For the 19 european countries that use the euro, it is considering a lower growth of 10.2% this year – more than the 8% decrease it had predicted in April – followed by a rebound in the growth of 6% in 2021.
India’s economy is expected to shrink by 4.5 per cent after a lock-in period is longer and slower recovery than expected in April.
In Latin America, where most countries are still struggling to contain the infections, the two largest economies, Brazil and Mexico, are projected to decline, respectively, 9.1% and 10.5%.
A sharp decline in oil prices has triggered deep recessions in oil-producing countries, the Russian economy to contract by 6.6% this year and saudi Arabia 6.8%.
The IMF warned that downside risks weigh on the forecasts remain important. He said that the virus could reappear, causing new closures and may be a new turmoil on the financial markets similar to what happened from January to march.
The IMF has cautioned that such financial turbulence could result in the vulnerable countries in debt crises, which would hinder further recovery efforts.
Its updated forecasts include a scenario to decrease, which provides a second major outbreak at the beginning of 2021. According to this scenario, the global economy is set to contract again next year by 4.9%, he says.