The International Monetary Fund forecasts a steep recession coming ahead and warns the world economy that things could be worse than anticipated if the dreaded coronavirus is not contained soon.
Calling the current crisis as the “Great Lockdown”, they firmly believe that it will rival the Great Depression, as the possible dramatic drop in activity would be far more painful than that followed the banking meltdown during the late 2000s.
The IMF states that the shock caused the by the coronavirus pandemic forced them to disregard their previous forecast three months ago, and predict that the 2020 global growth to fall to -3 percent.
Bigger output losses are predicted to happen in the rich economies of the west, in which they forecast to fall by 6.1 percent on average.
The two heavily affected European economies, Italy and Spain, may see their GDP fall to 9.1% and 8 % respectively, while Britain’s drop could be as low as 6.5%.
As for the emerging countries, China’s growth may fall to its lowest in decades, while India may expect a 1.9% fall from 4.2%.
If population changes are taken into account, the IMF predicts that the global living standards may fall by 4.2%; 6.5% in advance countries and by 7% in the UK.
According to IMF’s economic counselor Gita Gopinath, the size of the global economy hit due to the uncertainty of containing the virus, as well as the need to discourage economic activity led us to a crisis “like no other.”
“It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago. ‘The Great Lockdown’, as one might call it, is projected to shrink global growth dramatically,” she said.
However, partial recovery may come in 2021, depending on how the world will cope up and fight against the current pandemic.