International Monetary Fund (IMF) has signaled that the global economy will bear a denser downturn than it earlier forecasted as the coronavirus pandemic continues to propagate uncertainty and operational struggle around the world amid the pandemic. The forecast emphasizes the extent of severe economic conditions faced by policymakers since the Great Depression. Even as countries begin to resume their economies, it is increasingly visible that the restoration will be uneven as cases continue to swell and consumers remain cautious of resuming normal activity.
IMF expects the global economy to narrow down by 4.9%. It is observed that businesses have begun to reopen but voluntary social distancing and workplace safety standards are straining on economic activity. Moreover, the fear of downsizing and business closures implies that the world economy will recover much more slowly, with the IMF projecting 5.4% global growth in 2021, far below its pre-pandemic projections. IMF says that the cumulative loss of total output for the global economy this year and next year will top $12 trillion.“We are definitely not out of the woods,” said Gita Gopinath, director of the IMF’s research department. “This is a crisis like no other and will have a recovery like no other.” She also said that the gravity and span of the economic breakdown were not expected to be as severe, given the strength of the economy going into the crisis and the relative stability of the financial system. But now the trail of the recovery persists challenging to track, citing that much will depend on the development of a vaccine or cure for the coronavirus pandemic and also whether future situations create a demand for further lockdowns. The pandemic has not forborne advanced or developing economies. Economies in the eurozone are predicted to contract 10.2% this year and expand 6% next year. In China, where the virus originated has been imposed with extreme containment measures, the economy is expected to grow 1% this year and 8.2% in 2021.
The IMF notified that its outlook was more uncertain because the trajectory of the pandemic has remained challenging to predict. It recommended robust fiscal and monetary policy responses around the globe for helping to hold the economic breakdown but also reminded that accumulating debt could restrain additional support as governments began to worry about inflating deficits. IMF report perceives that, even in countries where epidemic rates are diminishing, major hindrances to a revival of normal activity continues. Travel and mobility remain discouraged, and the virus has reflected in a setback to consumption and investment.