The International Monetary Fund has projected that the global economy will shrink by 3.0% in 2020, a year hit third by the COVID-19 pandemic, which would mark the steepest downturn since the Great Depression of the 1930s
In its 2020 World Economic Outlook, the organization however predicted a partial rebound in 2021, with the world economy growing at a 5.8% rate, but noted that the forecasts were marked by “extreme uncertainty”, warning that outcomes could be far worse depending on the course of the pandemic.
“This recovery in 2021 is only partial as the level of economic activity is projected to remain below the level we had projected for 2021, before the virus hit,” Gita Gopinath, the IMF’s chief economist, said in a statement.
The COVID-19 pandemic has affected global economies in varying measures as countries battle to stop the disease.
Many countries have imposed lockdowns and limited movement among other measures, moves that ultimately affected economies.
As of Tuesday 14 April, the world had recorded more than 1.9 million COVID-19 cases with over 121,000 deaths.
According to the IMF, a longer pandemic that lasts through the third quarter could cause a further 3% contraction in 2020 and a slower recovery in 2021.
“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 IMF said in its report. “The Great Lockdown, as one might call it, is projected to shrink global growth dramatically.”
IMF Managing Director Kristalina Georgieva warned last week that some $8 trillion in fiscal stimulus being poured in by governments to stave off collapse was not likely to be enough.
The organization said some countries may need to turn to temporary limits on capital outflows.