The International Monetary Fund (IMF) predicts that the Corona Virus pandemic damage to economic activity will be broader and deeper than previous forecasts, as the Fund reduced its forecast for global output in 2020 again.
According to Reuters, the IMF said it expected global output to shrink 4.9 percent, compared to 3 percent in April forecasts, when it used available data at a time when it was Large-scale closures of economic activities are still in their infancy.
The expected recovery in 2021 will also be weaker, as global growth for that year is expected to be 5.4 percent, not 5.8 percent, as estimated in April's estimates. But the fund added that a new major outbreak in 2021 could reduce growth to just over 0.5 percent.
Although many economies have embarked on a resumption of activity, the Fund has said that the unique features of closures and social divergence have combined to derive both investment and consumption.
The fund said in an update to the World Economic Outlook report, and therefore, there is a widespread macro demand shock, which has exacerbated supply disruptions resulting from the closures.
The advanced economies have received particularly violent strikes, with US output expected to shrink 8 percent and Eurozone output 10.2 percent in 2021, and speculation is worse than more. Two percentage points compared to April forecast, according to the IMF.
Latin America, where injuries are still increasing, has witnessed some of the largest reductions, with Brazil's economy expected to contract by 9.1 percent, Mexico by 10.5 percent, and Argentina by 9.9 percent in 2020.
As for China, where companies started resuming activity in April and new infections are limited, it is the only major economy expected to achieve growth in 2020, at one percent compared to 1.2 percent in April forecast.
The IMF urged more measures from governments and central banks to support jobs and companies in order to reduce the damage and pave the way for an economic recovery.
