Portfolio

IMF bumps up 2020 global GDP forecast, but 'deep' recession still seen

By Alexander Bueso

Date: Tuesday 13 Oct 2020

IMF bumps up 2020 global GDP forecast, but 'deep' recession still seen

(Sharecast News) - The global economy will endure a slightly less horrid contraction over the course of the year than previously anticipated, the International Monetary Fund said.
In its latest World Economic Outlook, the world's watchdog for financial stability raised its projection for global GDP growth in 2020 to -4.4%, against a June estimate of -4.9%.

IMF chief economist, Gita Gopinath, attributed the improved outlook to faster-than-expected growth in developed economies and the People's Republic of China during the second quarter, describing the updated forecast as "somewhat less severe" - despite which the economy would still endure a "deep" recession.

There were also signs of a quicker recovery in third quarter growth.

Nevertheless, she also warned of a "long, uneven and uncertain" recovery.

The new forecast for 2020 would still be far worse than the approximately 1.7% contraction in global GDP seen in 2009.

It should also be noted that at the global level, a recession is typically defined as just GDP growth of below 2%.

Looking out to 2021, the IMF anticipated "only limited progress".

Even if only mechanistically, its forecast for the expected rebound in 2021 was trimmed from the 5.4% anticipated in June to 5.2%, .

The running assumptions of the Fund's economists were that social distancing measures would be extended into 2021, although declines in local rates of Covid-19 transmission were anticipated everywhere by the end of 2022.

"There are broad risks to the upside and to the downside. On the upside, we could have positive development in terms of treatments and vaccines that could hasten the end of this health crisis," Gopinath added.

"And we could also have more policy support that would help. But there are many downside risks. We could have worse news on the health front, and we could have greater financial turmoil at a time when debt is at the highest level in recorded history. And we have rising geopolitical tensions that could also derail the recovery."





Special promo:
Trading the Forex Market? Visit FXmania.com to get advanced infomation about currencies and the Foreign Exchange Market.

..

Email this article to a friend

or share it with one of these popular networks:


Top of Page