FILE – In this Feb. 14, 2020, file photo, Kristalina Georgieva, Managing Director of the International Monetary Fund, attends a session on the first day of the Munich Security Conference in Munich, Germany. Georgieva said that the global economy has started on a long climb to stronger growth with prospects looking a little better than four months ago. Georgieva said Tuesday, Oct. 6 that global economic activity suffered an unprecedented fall in the spring when 85% of the global economy was in lockdown for several weeks but currently the situation is less dire with many countries seeing better-than-expected rebounds in recent weeks (AP Photo/Jens Meyer, File)
The International Monetary Fund foresees a steep fall in international growth this year as the global economy struggles to recover from the pandemicinduced recession, its worst collapse in nearly a century.
WASHINGTON: The International Monetary Fund foresees a steep fall in international growth this year as the global economy struggles to recover from the pandemic-induced recession, its worst collapse in nearly a century.
The IMF estimated Tuesday that the global economy will shrink 4.4% for 2020. That would be the worst annual plunge since the Great Depression of the 1930s. By comparison, the international economy contracted by a far smaller 0.1% after the devastating 2008 financial crisis.
The monetary fund’s forecast for 2020 in its latest World Economic Outlook does represent an upgrade of 0.8 percentage point from its previous forecast in June. The IMF attributed the slightly less dire forecast to faster-than-expected rebounds in some countries, notably China, and to government rescue aid that was enacted by the United States and other major industrial countries.
But the 189-nation lending agency cautioned that many developing countries, notably India, are faring worse than expected, in large part because of a resurgent virus. Many nations face the threat of economic reversals if government support is withdrawn too quickly, the IMF warned.
While the global economy is coming back, the ascent will be long, uneven and uncertain, Gita Gopinath, the IMF’s chief economist, wrote in the new outlook. Recovery is not assured while the pandemic continues to spread.
While forecasting a global contraction this year after 2.8% growth last year, the IMF predicts a rebound to global growth of 5.2% next year, 0.2 percentage point lower than in its June forecast.
For the United States, the IMF forecasts an economic contraction of 4.3% this year, 3.7 percentage points better than in its June forecast. The less-pessimistic outlook reflects a stronger-than-expected bounce from the $3 trillion in relief aid that Congress enacted earlier this year.
For next year, the IMF envisions 3.1% growth in the United States, 1.4 percentage points less than in its June outlook and in line with the view of private forecasters. Last year, the U.S. economy grew 2.2%.
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