IMF MD: Global economic growth expected to fall to -4.4% in 2020

IMF warns of lasting damage long climb out of recession

The IMF estimated Tuesday that the global economy will shrink 4.4 per cent for 2020.

In 1987, Nigeria's economy receded by -10.87 and -0.6 in 1991.

But in a recent communiqué, an International Monetary Fund panel of 24 members responsible for keeping tabs on worldwide events likely to disrupt the world's financial system listed obstacles that could permanently affect global economic recovery.

The IMF is not the only worldwide organization that has raised its forecast for China.

While forecasting a global contraction this year, after 2.8 per cent growth in 2019, the International Monetary Fund predicts a rebound to global growth of 5.2 per cent next year, 0.2 percentage point lower than in its June forecast.

"The virus is resurging with localized lockdowns being re-instituted".

The Brookings Institution, in an update to its Tracking Indexes for the Global Economic Recovery published on Sunday, also said China has led the global recovery, with both the industrial and services sectors revived, and many indicators of economic activity already above pre-COVID levels.

The IMF official also noted that there is a strong differentiation across countries in response capacity, with low-income countries facing much stricter financing constraints than advanced economies and emerging market economies.

"In the second quarter the recovery in the USA came sooner than expected [and] quarter three has been strong as well", despite a resurge in coronavirus cases, Gopinath said, adding that the projection still remains in negative territory of minus 4.3 percent. Its economy is expected to expand 1.9 percent, an upward revision of 0.9 points. Last year, the USA economy grew 2.2 per cent. However, over the last five years, Bangladesh's per capita GDP has increased at a compound annual growth rate (CAGR) of 9.1 per cent, compared to 3.2 per cent growth recorded by India during the said period, according to BusinessToday.in, which first reported the switchover. It is also widening gender gaps and jeopardising hard-won development gains and prospects for girls and children overall, it said. "This reflects a combination of factors: the continuing spread of the pandemic and overwhelmed health care systems; the greater importance of severely affected sectors, such as tourism; and the greater dependence on external finance, including remittances".

"Avoid premature withdrawal of support for the economy, as this could inflict tremendous damage", she said.

The IMF said emerging market countries and developing economies would suffer more severe downturns than developed economies as a result of COVID.

The US economy has been hit hard by coronavirus. India's GDP per capita in dollar terms had last contracted 1% year-on-year in 2012 due to currency depreciation.

However, Gopinath said that if China is excluded, global growth next year would be negative.

"The considerable global fiscal support of close to $12 trillion and the extensive rate cuts, liquidity injections and asset purchases by central banks helped save lives and livelihoods and prevented a financial catastrophe", Gopinath said.

Some economists have forecast that China's GDP growth rate is likely to pick up to above 5 percent following a strong rebound of 3.2 percent in the second quarter. Many aid groups are pressing for rich nations to go further and forgive part of the debt rather than just halt repayments.

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