World economy in deep recession in 2020, growth to be -4.4 per cent: IMF

IMF on Tuesday predicted a deep global recession this year and world growth to be - 4.4 per cent, asserting that global ecomic crisis is far from over mainly due to impact of coronavirus pandemic.

In its latest World Ecomic Outlook report, International Monetary Fund also said swift recovery in China has surprised on upside while global ecomy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks.

“This crisis is however far from over. In our latest World Ecomic Outlook, we continue to project a deep recession in 2020. Global growth is projected to be -4.4 per cent, an urd revision of 0.8 percent points compared to our June update,” Gita Gopinath, Chief Ecomist of IMF, said.

This upgre owes to somewhat less dire outcomes in second quarter, as well as signs of a stronger recovery in third quarter, offset partly by downgres in some emerging and developing ecomies.According to report, in 2021, growth is projected to rebound to 5.2 per cent, -0.2 percent points below its June projection.ting that COVID-19 pandemic continues to spre with over one million lives tragically lost so far, Indian-American ecomist said living with vel coronavirus has been a challenge like or.

However, she said world is apting as a result of eased lockdowns and rapid deployment of policy support at an unprecedented scale by central banks and governments around world. global ecomy is coming back from depths of its collapse in first half of this year,she said.

“Employment has partially rebounded after having plummeted during peak of crisis. This crisis is however far from over. Employment remains well below pre-pandemic levels and labour market has become more polarised with low-income workers, youth, and women being harder hit,” she ded.

She furr said poor are getting poorer with close to 90 million people expected to fall into extreme deprivation this year.

ascent out of this calamity is likely to be long, uneven, and highly uncertain. It is essential that fiscal and monetary policy support are t prematurely withdrawn, as best possible,Gopinath said.

Gopinath said that except for China, where output is expected to exceed 2019 levels this year, output in both vanced ecomies and emerging market and developing ecomies is projected to remain below 2019 levels even next year.Countries that rely more on contact intensive services and oil exporters face weaker recoveries compared to manufacturing-led ecomies.

divergence in income prospects between vanced ecomies and emerging and developing ecomies, excluding China, triggered by this pandemic is projected to worsen, she said. IMF has upgred its forecast for vanced ecomies for 2020 to -5.8 per cent, followed by a rebound in growth to 3.9 per cent in 2021.

Gopinath said for emerging market and developing countries, excluding China, IMF has a downgre with growth projected to be - 5.7 per cent in 2020 and n a recovery to 5 per cent in 2021.

With this, cumulative growth in per capita income for emerging-market and developing ecomies, excluding China, over 2020-21 is projected to be lower than that for vanced ecomies, she said.Gopinath said that considerable global fiscal support of close to USD 12 trillion and extensive rate cuts, liquidity injections, and asset purchases by central banks helped save lives and livelihoods and prevented a financial catastrophe.

“re is still much that needs to be done to ensure a sustained recovery,” she said.

First, greater international collaboration is needed to end this health crisis. Second, to extent possible, policies must aggressively focus on limiting persistent ecomic dam from this crisis.Gopinath said over time, as recovery strengns, policies should shift to facilitating reallocation of workers from sectors likely to shrink on a long-term basis (travel) to growing sectors (e-commerce).

Emerging market and developing ecomies are having to man this crisis with fewer resources, as many are constrained by elevated debt and higher borrowing costs, she said.Lastly, Gopinath said policies should be designed with an eye toward placing ecomies on paths of stronger, equitable, and sustainable growth.

global easing of monetary policy while essential for recovery should be complemented with measures to prevent build-up of financial risks over medium term, and central bank independence should be safeguarded at all costs, she said.