Singapore (14 April 2020) – The global economy is projected to shrink by as much as 3% in 2020 as a result of the COVID-19 pandemic, much worse than the contraction witnessed during the 2008-9 financial crisis, says the International Monetary Fund.
The global economy is expected to see growth of 5.8% in 2021, should the pandemic fade away in the second half of 2020, containment efforts gradually unwound and economic activity returns to normal helped by policy support, the IMF said.
The risks for even more severe outcomes, however, are substantial as many countries are faced with multi-layered crisis comprising a health shock, domestic economic disruptions, plummeting external demand, capital flow reversals, and a collapse in commodity prices, the multilateral body said.
Essential policies are essential to forestall worse outcomes. Necessary measures to reduce contagion and protect lives will take a short-term toll on economic activity but should also be seen as an important investment in long-term human and economic health. The immediate priority is to contain the fallout from the COVID-19 outbreak, by increasing health care expenditures to strengthen the capacity and resources of the health care sector while adopting measures that reduce contagion, according to the IMF.
World Economic Outlook: Projections
| 2019 | 2020 Projections | |
| United States | 2.3 | -5.9 |
| Germany | 0.6 | -7.0 |
| France | 1.3 | -7.2 |
| Italy | 0.3 | -9.1 |
| Spain | 2.0 | -8.0 |
| Japan | 0.7 | -5.2 |
| UK | 1.4 | -6.5 |
| Canada | 1.6 | -6.2 |
| China | 6.1 | 1.2 |
| India | 4.2 | 1.9 |
| Russia | 1.3 | -5.5 |
| Brazil | 1.1 | -5.3 |
| Saudi Arabia | 0.3 | -2.3 |
| ASEAN-5 * | 4.8 | -0.6 |
Source: IMF – Overview of the World Economic Outlook Projections, Executive Summary
ASEAN-5* – Indonesia, Malaysia, Philippines, Thailand, Vietnam
Economic policies will also need to cushion the impact of the decline in activity on people, firms, and the financial system; reduce persistent scarring effects from the unavoidable severe slowdowns; and ensure that the economic recovery can begin quickly once the pandemic fades.
As the economic fallout reflects particularly acute shocks in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses. Such actions will help maintain economic relationships throughout the shutdown and are essential to enable activity to gradually normalise once the pandemic abates and containment measures are lifted.
The significant actions of large central banks in recent weeks include monetary stimulus and liquidity facilities to reduce systemic stress. These actions have supported confidence and contribute to limiting the amplification of the shock, thus ensuring that the economy is better placed to recover.-/- www.halaluniverse.net
