Says global economy climbing out of the depths, prone to setbacks
The International Monetary Fund (IMF) has lowered its forecast for global economic contraction in 2020 to 4.4 percent, citing improved economic activities owing to scaling down of restrictions induced by the COVID-19 pandemic. The Fund stated this in its October 2020 World Economic Outlook (WEO) released this morning.
The IMF had in June projected that global economy will contract by 4.9 percent. “The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast”, the Fund stated in the updated version of its June 2020 WEO.
The IMF however said that the lower global economic contraction forecast contained in its October WEO is due to, “better- than- anticipated second quarter Gross Domestic Product (GDP) outturns, mostly in advanced economies, where activity began to improve sooner than expected after lockdowns were scaled back in May and June, as well as indicators of a stronger recovery in the third quarter.”
But the IMF was less optimistic about global economic growth in 2021, warning that, “global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks.”
Consequently, the Fund lowered its global growth forecast for the year to 5.2%, down from 5.4% earlier projected in the June edition of its World Economic Outlook.
According to the IMF, “Global growth is projected at 5.2 percent in 2021, a little lower than in the June 2020 WEO Update, reflecting the more moderate downturn projected for 2020 and consistent with expectations of persistent social distancing. Following the contraction in 2020 and recovery in 2021, the level of global GDP in 2021 is expected to be a modest 0.6 percent above that of 2019. The growth projections imply wide negative output gaps and elevated unemployment rates this year and in 2021 across both advanced and emerging market economies.”