IMF: Global economy to take $12tn hit from coronavirus

LONDON - 24 June 2020: The International Monetary Fund (IMF) projected that the cumulative loss of total output for the global economy this year and next year will top $12 trillion, The New York Times reported.

In an update to its World Economic Outlook, which was released on Wednesday, the IMF said it expected the global economy to shrink 4.9 percent this year — a sharper contraction than the 3 percent it predicted in April.

The IMF added that it would take two years for world output to return to levels at the end of 2019 and warned that governments should be cautious about removing financial support to their fragile economies.

The coronavirus pandemic had been more negative for activity in the first half of 2020 than expected, and recovery was also projected to be slower, the IMF said, noting that global growth is forecast to be 5.4 percent in 2021, down from 5.8 percent in April, but would plummet to zero in the event of a second wave of the pandemic early next year.

Meanwhile, IMF’s economic counsellor, Gita Gopinath said that “the Covid-19 pandemic pushed economies into a Great Lockdown, which helped contain the virus and save lives but also triggered the worst recession since the Great Depression.”

She noted that the fall in output in 2020 would be half as bad as the 10 percent drop in the early 1930s, adding that there would be a fall in living standards for 95 percent of countries this year.