Coronavirus: global economic downturn in 2020 likely to be worst since Great Depression, IMF says

IMF slashes global economic growth forecast to minus 3 per cent in 2020, from a 3.3 per cent increase predicted in January

China will grow only 1.2 per cent this year, down from 6.1 per cent in 2019 and well below the IMF’s January forecast of 6.0 per cent

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The IMF has forecast global economic growth to shrink by 3 per cent in 2020 amid the coronavirus pandemic. Photo: AP

Published: 8:30pm, 14 Apr 2020Updated: 10:39pm, 14 Apr 2020

The global economy is very likely to experience its worst downturn since the Great Depression of the 1930s due to the coronavirus pandemic, surpassing that of the global financial crisis, the International Monetary Fund (IMF) said in a new forecast on Tuesday.

Economic growth will shrink by 3 per cent in 2020, “far worse” than during the financial crisis in 2009 when growth contracted by 0.7 per cent, according to the IMF’s World Economic Outlook report.

If the Covid-19 pandemic fades in the second half of this year, the global economy will rebound to record growth of 5.8 per cent in 2021 with sufficient policy support, but gross domestic product will remain below the pre-virus trend, the IMF said.

In an indication of just how quickly and deeply the coronavirus pandemic has damaged the world economy, the IMF’s latest global forecast is a complete reversal of its January projection of 3.3 per cent growth.

In China, indicators such as industrial production, retail sales, and fixed asset investment suggest that the economy contracted by about 8 per cent in the first quarter compared to a year-earlier.

Even with a sharp rebound during the remainder of the year and sizeable fiscal support, the world’s second largest economy is projected to grow by only 1.2 per cent in 2020, down from the IMF’s previous forecast of 6.0 per cent growth, and far below the 6.1 per cent expansion recorded last year.

The IMF, which has 189 member countries, forecast growth in the most advanced economies to shrink sharply in 2020, including in Italy by minus 9.1 per cent, Spain by minus 8.0 per cent, Britain by minus 6.5 per cent, the United States by minus 5.9 per cent and Japan by minus 5.2 per cent.