IMF chief economist says coronavirus could inflict 'significant scarring' to world economy

The economic fallout from the coronavirus pandemic could inflict "significant scarring" in global economies, IMF chief economist Gita Gopinath warned. Speaking at the virtual address to the Asian monetary policy forum on June 12, she also asserted that chances of recovery remained highly uncertain. The coronavirus pandemic has incurred great losses to economies pushing countries like Japan into recession.

'Projections would be worse' 

In April, the International Monetary Fund (IMF) had projected a 3.0 per cent contraction in the global economy, however, Gopinath said that the updated forecast, due on June  26, would be “very likely worse”. Elaborating further she added there was a “profound unlikeliness of recovery”. This comes as the World Bank recently said that it expects the global economy to contract by 5.2 per cent amid the worst widespread crisis in 150 years.

Read: CIMFR Recruitment 2020: Applications Invited For Technical Assistant Vacancies In Dhanbad

IMF, in its World Economic Outlook in April, warned that the downturn, which is worse than the great economic depression, could get even worse if the pandemic was prolonged or saw a resurgence. Meanwhile, Gopinath highlighting losses incurred to particular sectors like transportation and automobiles combined with job losses said that “one had to be concerned about a path of recovery".

Read: IMF Chief: It Could Take 3 Years For Global Economy To Return To Pre-COVID Level

This comes as the head of the International Monetary Fund (IMF) Kristalina Georgieva, in May, had reportedly warned that it could take until 2023 for the global economy to return to its pre-COVID-19 levels. While speaking to an international media outlet, Georgieva said that the ‘most severe shock’ has already occurred as 170 countries have entered negative economic growth since March. She also expects that the global economy shrinks further beyond the current IMF estimate of negative three per cent GPD in 2020 before a ‘partial recovery’ in 2021. 

Read: IMF Sanctions Stand-by Agreement Worth $5 Billion For Ukraine Lasting 18 Months

Read: Pakistan Squirms At IMF's Demand To Cut Salaries Of Govt Employees; Cites Inflation