The International Monetary Fund said Tuesday that the novel Coronavirus will likely push the global economy into its worst recession since The Great Depression of the 1930s and further warned that the prospects of a worldwide rebound are highly uncertain.
The IMF projected that the economy would contract sharply by three percent in 2020, much worse than during the 2008-09 financial crisis. Further, in a baseline scenario, which assumes that the containment efforts can be gradually reduced in the second half of 2020, the global economy is then projected to grow by five percent in 2021.
However, should the coronavirus restrictions remain or there is a resurgence of cases in the second half of 2020, the risks of a far more severe outcome are substantial.
“Effective policies are essential to forestall the possibility of worse outcomes, and the necessary measures to reduce contagion and protect lives are an important investment in long-term human and economic health. Because the economic fallout is acute in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically. And internationally, strong multilateral cooperation is essential to overcome the effects of the pandemic, including to help financially constrained countries facing twin health and funding shocks, and for channeling aid to countries with weak health care systems.”
In addition to the International Monetary Fund’s warning, the World Trade Organization also issued a stark warning that global trade will contract between thirteen and thirty-two percent this year alone. Also, the Economic Coordination and Development issued a dire warning that the economic hit from the virus will be felt for a long time to come.
The IMF is calling the crisis “The Great Lockdown” and calls the global pandemic “a crisis like no other.” Further, the IMF also stated that they had received an unprecedented number of calls for emergency funding. Out of the 189 member countries, 90 have asked for financial support.
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The world is suffering a crisis that will rival The Great Depression.