IMF says ‘Great Lockdown’ recession will be the worst since the Great Depression of the 1930s as it expects the U.S economy to shrink 5.9%

Tuesday, April 14, 2020
By Paul Martin

The world economy will shrink by 3.0% during 2020, the IMF forecast Tuesday
That’s far worse than its 0.1% dip in the Great Recession year of 2009
The IMF expects economic contractions this year of 5.9% in the United States, with a rebound to 4.7% growth in 2021 under the Fund’s best-case scenario
China, where the pandemic originated, is expected to eke out 1.2% growth
‘The Great Lockdown is projected to shrink global growth dramatically’, IMF say

By LAUREN FRUEN
DAILYMAIL.COM
14 April 2020

The global economy is expected to suffer its worst year since the Great Depression of the 1930s, the International Monetary Fund forecast Tuesday.

Beaten down by the coronavirus outbreak, the world economy will shrink by 3.0 per cent during 2020 — far worse than its 0.1 per cent dip in the Great Recession year of 2009 — before rebounding in 2021 with 5.8 per cent growth.

In its latest outlook, the IMF expects economic contractions this year of 5.9 per cent in the United States, with a rebound to 4.7 per cent growth in 2021 under the Fund’s best-case scenario. Euro zone economies will contract by 7.5 per cent in 2020.

China, where the pandemic originated, is expected to eke out 1.2 per cent growth this year. The world’s second-biggest economy, which had gone into lockdown, has begun to open up well before other countries.

While acknowledging that prospects for a rebound next year are clouded by uncertainty the bleak assessment represents a breathtaking downgrade by the IMF.

In its previous forecast in January, before COVID-19 emerged as a grave threat to public health and economic growth worldwide, the international lending organization had forecast moderate global growth of 3.3 per cent this year.

But far-reaching measures to contain the pandemic — lockdowns, business shutdowns, social distancing and travel restrictions — have suddenly brought economic activity to a near-standstill across much of the world.

‘It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago,’ the IMF said in its report. ‘The Great Lockdown, as one might call it, is projected to shrink global growth dramatically.’

Worldwide trade will plummet 11 per cent this year, the IMF predicts, and and then grow 8.4 per cent in 2021.

‘This recovery in 2021 is only partial as the level of economic activity is projected to remain below the level we had projected for 2021, before the virus hit,’ IMF chief economist Gita Gopinath said in a statement.

Under the Fund’s best-case scenario, the world is likely to lose a cumulative $9 trillion in output over two years – greater than the combined GDP of Germany and Japan, she added.

The IMF’s twice-yearly World Economic Outlook was prepared for this week’s spring meetings of the 189-nation IMF and its sister lending organization, the World Bank.

Those meetings, along with a gathering of finance ministers and central bankers of the world’s 20 biggest economies, are being held virtually for the first time in light of the coronavirus outbreak.

Last week, the IMF’s managing director, Kristalina Georgieva, warned that the world was facing ‘the worst economic fallout since the Great Depression.’

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