Having examined recent statistics on the impact of COVID-19, the International Monetary Fund (IMF) has been left with no choice but to downgrade its ambitious growth projections for the world economy to 4.9 percent in 2020. This is 1.9 percent below the April 2020 World Economic Outlook (WEO) forecast.
In its latest assessment that was released today, the international agency said it is clear that the COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. The IMF said that in 2021, global growth is projected at 5.4 percent. Overall, this would leave 2021 GDP some 6½ percentage points lower than in the pre-COVID-19 projections. The Fund said that the adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s.
The Fund said that all countries—including those that have seemingly passed peaks in infections—should ensure that their health care systems are adequately resourced. The financial institution said too that the international community must vastly step up its support of national initiatives, including through financial assistance to countries with limited health care capacity and channeling of funding for vaccine production as trials advance, so that adequate, affordable doses are quickly available to all countries.
Where lockdowns are required, the IMF said that economic policy should continue to cushion household income losses with sizable, well-targeted measures as well as provide support to firms suffering the consequences of mandated restrictions on activity.