The coronavirus pandemic is plunging the world economy into the worst recession since the 1930’s Great Depression, and policymakers and health authorities need to work together to avert an even worse outcome.
This is the International Monetary Fund’s strong message, who said Tuesday there was a possibility that the recession would extend to 2021 if policymakers refused to plan a global response to the pandemic.
In its current prediction for the world economy, the IMF has reported that it expects GDP to fall by 3% in 2020, a much worse recession than the one that preceded the 2008 global financial crisis, and a 180-degree reverse of its original projection in January when it predicted growth of 3.3% this year.
The IMF said in a statement:
“The Great Lockdown, as one might call it, is projected to shrink global growth dramatically. A partial recovery is projected for 2021 … but the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound,”
“Much worse growth outcomes are possible and maybe even likely,”
In the United States, where the government has accepted funding for more than $2 trillion and where the Federal Reserve has released trillions more to prevent the banking sector from seizing, the IMF expects this year’s economy to contract by 5.9 percent. This will be the worst recession since 1946 , although it is expected to suffer a smaller fall in output than other European nations.
Notably, in countries where authorities and central banks have reacted strongly in an attempt to support workers and companies, the outlook is bleak. The IMF expects Germany’s economy to fall by 7 percent in 2020, the highest in Europe, and heavily exposed to global trade. The Canadian economy is expected to contract by 6.2 percent, while the UK can foresee a 6.5 percent fall.
The third-largest economy in the world, Japan, is expected to fall by 5.3 percent, but it has so far resisted enforcing stringent regional limits on travel, employment, and public life that have paralyzed economic growth in many areas of the world.
The IMF prediction indicates that the world is in the early stages of the most serious global recession in nearly a century, and that attempts to combat the pandemic would cost tens of millions of people their employment and outsource hundreds of thousands of companies. According to the IMF, unemployment in the United States will increase this year to 10.4 percent, and by 2021 to 9.1 percent.
The Panthera Post 