The International Monetary Fund says the global economy will shrink by 3% as different nations around the world continue to enforce different mitigation measures against coronaviruses. This will be the first time since the 1930s Great Depression and both industrialized and developing countries are expected to go into recession
Worldwide, over 1,999,000 cases have been confirmed with over 126,000 deaths, and the IMF describes the pandemic as the worst since the great 1930s.
The IMF says the coronavirus has brought the world into crisis more than any other pandemic. They also see the pandemic as a test of the ability of governments and central banks to control the crisis.
According to IMF chief economist Gita Gopinath, the pandemic could pull $ 9 trillion from the global GPD over the next two years.
However, the fund applauses the Rapid lockdowns, adopted by countries like the UK, Germany, Japan, and the United States to curb the spread of COVID-19. Though, situation meant that no country could have opposed the decision to follow the suit in the midst of this rapidly spreading virus.
The fund expects global economic growth to recover next by 5.8% if the current situation extends through mid-2020.
Ms. Gospinas sees today’s lockdown as a representation of the grim reality for government decision-makers who faced great uncertainty about the duration and intensity of the shock.
The same IMF predicts that the UK economy will shrink by 6.5% this year. This will be a record drop that Britain has seen in any financial crisis since 1921.
The UK employment protection scheme, which aims to keep workers in work during the lockdowns, is expected to limit unemployment growth. The Bank of England has also lowered interest rates to allow billions of dollars to be passed to commercial banks that lent to people.
Also, the US economy is expected to decline by 5.9% this year. This also means that the United States will see the largest annual decline since 1946. Likewise, IMF expects the US unemployment rate to rise to 10.4% this year and partial economic growth of 4.7%% next year.
In China, where the outbreak began, economic growth will also decline. The IMF expects China to expand economically by only 1.2% this year. This is the lowest level since 1976.
While the economy is forecasted to decline worldwide, the IMS also warns of the worst result. If the pandemic is not addressed early or if a second wave could occur in 2021, the global GDB will decrease by a further 8%.
Overall, the IMF considers existing quarantine and social measures to be crucial to curb the spread of this pandemic, even if it restricts economic activity. They said that pre-containment measures are essential to slow the spread of the virus and enable the health care system to deal with it and to pave the way for an earlier and more robust resumption of economic activity.
The world has no choice but to enforce such measures to curb the spread even if it poses negative results to economies.
Charalotte Griffith is assignment Journalist at Chroniclex, Charalotte has covered Business, Politics and many other beats in her Journalism career and is currently living in Cleveland for more than 15 years. Charalotte has appeared periodically on national television shows and also has published her articles many regional publications such as Huffington Post and Mashable etc.