The forecast for 2020 is that the world economy will decline by 3%. The economic institution has offered to alleviate debt to the most vulnerable nations in Africa, Asia, the Middle East and the Caribbean, which should help to partially halt the decline.
After forecasting that this will be the worst economic recession since the Great Depression, the International Monetary Fund said on Tuesday that the economy will slow down by 3% in 2020, representing a drastic change from their forecasts in the last report of the World Economic Outlook published in January.
Gita Gopinath, director of the Fund’s Research Department, said in a blog note from the institution that, following the global shutdown in response to the coronavirus, “the magnitude and speed of the collapse of economic activity that has occurred it is different from everything we have experienced in our lives“.
There is considerable uncertainty about what the economic outlook will be like when we emerge from this lockdown.
Many countries now face multiple crises, especially health, finance, and collapsing commodity prices, which interact in complex ways.
“Policymakers provide unprecedented support to households, businesses and financial markets, and while this is crucial for a strong recovery, there is considerable uncertainty about what the economic outlook will be like when we emerge from this lockdown.” , he assured.
Assuming that in most countries the pandemic and the required containment peak in the second quarter, and recede in the second half of the year, according to the April World Economic Outlook, the Fund projects that growth worldwide in 2020 will fall to -3%.
“This represents a decrease of 6.3% from January 2020, a major revision in a very short period of time. What makes the Great
Confinement in the worst recession since the Great Depression, and much worse than the Global Financial Crisis, “he said.
Gopinath indicated that there is some margin of optimism for next year, on the assumption that COVID-19 is diluted and that political actions taken around the world to prevent widespread company bankruptcies, prolonged job losses and financial stress across the system are effective.
“We project a 5.8% recovery by 2021,” Gopinath said.
However, this recovery in 2021 is only partial as the level of economic activity is expected to remain below the level we had projected for that year before the virus arrived. The cumulative losses to world GDP during 2020 and 2021 from the pandemic crisis could be around $ 9 trillion, a figure higher than the economies of Japan and Germany combined.
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Debt relief for the 25 poorest nations
Separately, the International Monetary Fund announced on Monday that it was extending immediate debt relief to its 25 poorest and most vulnerable member countries, in Africa, Asia, the Middle East and the Caribbean, to help them tackle the devastating economic effects of COVID -19.
The measure, approved by the Fund’s Executive Board on Monday, se adopts within the framework of its new confidence measures, containment and catastrophe, which can provide around $ 500 million in grants to countries in emergency need.
“This measure pprovides grants to our poorest members and vulnerable to cover its debt obligations with the Fund during an initial phase in the next six months, ”said its managing director, Kristalina Georgieva.
“It will also help them channel their scarce financial resources toward vital emergency medical and other efforts,” he added in a statement.
The 25 countries are Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger,
Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo and Yemen.