Washington DC, Apr 14 (efe-epa).- The world economy will likely experience a recession this year not seen since the Great Depression, the International Monetary Fund said Tuesday as it slashed growth forecast figures in the wake of the global coronavirus pandemic.
The IMF now expects the global economy to contract “sharply” by 3 percent this year as governments across the world impose lockdowns and suspend non-essential economic activities to protect their healthcare systems and limit the spread of the Covid-19 disease.
“It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the financial crisis a decade ago,” the IMF said in its World Economic Outlook, in which it coined the term the Great Lockdown to refer to the current crisis.
The latest forecast reversed previous estimates that the global economy would grow 3.3 percent this year.
The predicted downward turn will be driven by a 5.9 percent contraction in the United States economy and China’s abrupt economic slowdown, which revises growth projections in the Asian giant down to 1.2 percent this year, the IMF said.
Contractions were expected across the board in the world’s advanced economies with the Euro Area set to contract 7.5 percent — Germany -7 percent; France -7.2 percent; Italy -9.1 and Spain -8 percent.
The United Kingdom is set to see its growth tumble to -6.5 percent while Japan and Canada will contract -5.2 and -5.2 percent respectively.
Some emerging economies are still predicted to grow but less than previously indicated, such as India, whose economy is predicted to slow to 1.9 percent.
The world economy is projected to grow by 5.8 percent in 2021 if the Covid-19 pandemic subsides in the second half of this year and government policy-making is adequate, the IMF said.
But it warned that the figures were shrouded with uncertainties and that countries should brace for worse consequences still.
‘“The risks for even more severe outcomes, however, are substantial,” the report said.
“Because the economic fallout is acute in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically,” it added.
A strong multilateral approach was needed to mitigate the economic damage brought by the health pandemic, the IMF outlined in its half-yearly report, “especially to financially constrained countries facing twin health and funding shocks, and for channeling aid to countries with weak health care systems.” EFE-EPA