The global economy is headed to contract “sharply” by 3% in 2020 as a result of the COVID-19 pandemic, much worse than during the 2008-09 financial crisis, the World Economic Outlook released by the International Monetary Fund (IMF) Tuesday said.
The world has changed dramatically in the last three months, IMF Chief Economist Gita Gopinath told reporters, noting that the latest projection is 6.4 percentage points lower than the IMF’s January outlook.
Gopinath said that the cumulative global output loss across 2020 and 2021 is expected to total $9 trillion, the deepest recession since the Great Depression of the 1930s.
The latest outlook projects that the output of advanced economies will shrink significantly by 6.1% in 2020, while the output of emerging market and developing economies will decline by 1.0%. China and India, however, will see moderate growth of 1.2% and 1.9%, respectively.
If the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound, the global economy is projected to grow by 5.8% in 2021 as economic activity normalizes, helped by policy support, Gopinath said.
Noting that there is “extreme uncertainty” around the global growth forecast, the IMF chief economist said economic fallout depends on factors that interact in ways that are hard to predict.