Coronavirus may lead to worst global recession since Great Depression: IMF

The coronavirus pandemic will plunge the global economy into its worst recession since the Great Depression, the International Monetary Fund predicted Tuesday.

The fund expects the world economy to contract by 3 percent in 2020 as measures meant to stop the virus freeze economic activity around the world. That’s a much steeper drop than 2009, when the economy shrank 0.7 percent amid the global financial crisis.

“The Great Lockdown, as one might call it, is projected to shrink global growth dramatically,” IMF economic counsellor Gita Gopinath said in the fund’s 2020 World Economic Outlook. “Much worse growth outcomes are possible and maybe even likely.”

Experts have predicted a deep recession as lockdowns aimed at curbing the pandemic forced businesses around the world to close, shut consumers in their homes and put millions of people out of work.

If the virus crisis wanes in the second half of this year, the IMF expects the global economy will grow 5.8 percent in 2021 as a recovery starts with help from governments and central banks. But there is “extreme uncertainty” about the forecast because the path of the virus crisis and its economic effects are tough to predict, according to IMF officials.

“Many countries face a multi-layered crisis comprising a health shock, domestic economic disruptions, plummeting external demand, capital flow reversals, and a collapse in commodity prices,” the fund’s outlook says. “Risks of a worse outcome predominate.”

With Post wires

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