‘A Crisis Like No Other’ IMF Says on Shrinking Global Economy

The global economic growth will contract by 3 per cent in 2020 due to the impact that Covid-19 has exerted on countries, the International Monetary Fund (IMF) said on Tuesday.

“This is a crisis like no other,” Gita Gopinath, the IMF’s Chief Economist, said as she announced the latest forecast in a virtual press briefing.

“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,” IMF Chief Economist Gita Gopinath wrote in the foreword for the fund’s World Economic Outlook titled ‘The Great Lockdown’.

The latest projection is a revision of 6.4 percentage points from the previously projected forecast to -3 per cent.

The US economy will contract by 5.9 per cent, while the economies of Italy and Spain which have been hit harder by Covid-19, will contract by 9.1 per cent and 8 per cent, respectively.

Sub-Saharan African economies will register negative growth of 1.6 per cent, with Nigeria, one of the major oil exporters, and South Africa expected to be hit the most.

Nigeria and South Africa are expected to contract 3.4 per cent and 5.8 per cent, respectively.

In Kenya, the Central Bank is projecting a growth of 3.4 per cent this year, while the Treasury expects it to hit three per cent.

“A partial recovery is projected for 2021, with above-trend growth rates, but the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound,” Gopinath noted.

The cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around 9 trillion dollars, greater than the combined economies of Japan and Germany.