World GDP plunging 4.9% this year, wiping out $12 trillion: IMF
WASHINGTON (92 News) – The International Monetary Fund (IMF) said the coronavirus has sparked an economic “crisis like no other,” sending the world GDP plunging 4.9% this year and wiping out $12 trillion over two years.
IMF chief economist Gita Gopinath said under the current forecasts, the crisis will destroy $12 trillion over two years, and cautioned, “We are not out of the woods.”
She warned governments against withdrawing the stimulus too quickly. “This is a crisis that requires all hands on deck,” she told reporters. While governments and central banks have gone to extraordinary lengths so far to provide support for workers and businesses, more will be needed. “It’s important not to back off very quickly, but to do so only gradually, because this crisis is not over,” Gopinath said.
The downturn is particularly damaging for low-income countries and households, and threatens to endanger the progress made on reducing extreme poverty, the Washington-based crisis lender said in its report.
In its updated World Economic Outlook, the IMF said the prospects for recovery post-pandemic – like the forecasts themselves – are steeped in “pervasive uncertainty” given the unpredictable path of the virus.
“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 warned.
It is pertinent to mention here that worldwide business shutdowns destroyed hundreds of millions of jobs, and major economies in Europe face double-digit collapses in the worst crisis since the Great Depression nearly a century ago.
While businesses are reopening in many countries and China has seen a bigger rebound in activity than expected, the second wave of viral infection threatens the outlook, the report said. The world GDP is expected to rebound by just 5.4% in 2021, and only if all goes well, the IMF warned.