IMF: Stung by virus, global economy will shrink 3% in 2020

Beaten down by coronavirus outbreak, world ecomy in 2020 will suffer its worst year since Great Depression of 1930s, International Monetary Fund says in its latest forecast.

IMF said Tuesday that it expects global ecomy to shrink 3% this year — far worse than its 0.1% dip in Great Recession year of 2009 — before rebounding in 2021 with 5.8% growth. It ackwledges, though, that prospects for a rebound next year are clouded by uncertainty.

bleak assessment represents a breathtaking downgre by IMF. In its previous forecast in January, before COVID-19 emerged as a grave threat to public health and ecomic growth worldwide, international lending organization h forecast moderate global growth of 3.3% this year. But far-reaching measures to contain pandemic — lockdowns, business shutdowns, social distancing and travel restrictions — have suddenly brought ecomic activity to a near-standstill across much of world.

IMF’s twice-yearly World Ecomic Outlook was prepared for this week’s spring meetings of 189-nation IMF and its sister lending organization, World Bank. Those meetings, along with a garing of finance ministers and central bankers of world’s 20 biggest ecomies, are being held virtually for first time in light of coronavirus outbreak.

In its latest outlook, IMF expects ecomic contractions this year of 5.9% in United States, 7.5% in 19 European countries that share euro currency, 5.2% in Japan and 6.5% in United Kingdom. China, where pandemic originated, is expected to eke out 1.2% growth this year. world’s second-biggest ecomy, which h gone into lockdown, has begun to open up well before or countries.

Worldwide tre will plummet 11% this year, IMF predicts, and and n grow 8.4% in 2021.

Last week, IMF's managing director, Kristalina Georgieva, warned that world was facing “ worst ecomic fallout since Great Depression.’’ She said that emerging markets and low-income nations across Africa, Latin America and much of Asia were at especially high risk. And on Monday, IMF approved $500 million to cancel six months of debt payments for 25 impoverished countries so y can help confront pandemic.

Just three months ago, IMF h forecast that more than 160 countries would register income growth on a per-capita basis. w, it expects negative per-capita income growth this year in 170 countries.

IMF cautioned Tuesday that its latest forecast is shrouded by unkwns. y include path that virus will take; effectiveness of policies meant to contain outbreak and minimize ecomic dam; and uncertainty over wher, even many months from w, people will continue to isolate mselves and depress spending as a precaution against a potential resurgence of virus.

On a hopeful te, IMF ted that ecomic policymakers in many countries have engineered what it calls a “swift and sizable’’ response to ecomic crisis. United States, for instance, has enacted three separate rescue measures, including a $2.2 trillion aid pack — largest in history — that is meant to sustain households and businesses until outbreak recedes and ecomic life begins to return to rmal.

That pack includes direct payments to individuals, business loans, grants to companies that agree t to lay off workers and expanded unemployment benefits. And Congress is moving toward approving a possible fourth ecomic aid measure.

Meghan Clem, CEO of wedding and party-planning company Intertwined Events, says she is hoping that some government loans come through so she can continue to pay her staff. next two to three months will likely be worst of crisis for Intertwined Events.

“All events have been canceled or postponed to fourth quarter, so we are seeing a full stop of revenue for May, June and likely July,” said Clem, whose company is based in Irvine, California.

Some countries can't afford sufficiently aggressive rescue plans, IMF said, and “may require external support." Georgieva has said that IMF is prepared to commit its $1 trillion in lending capacity to support nations that need help in dealing with pandemic.

IMF is also calling on countries to work cooperatively to fight pandemic.

“Countries urgently need to work toger to slow spre of virus and to develop a vaccine and rapies to counter disease,’’ lending ncy said.