(15 June 2020 – Global) The International Monetary Fund (IMF) is set to release new global economic growth forecasts painting an even gloomier path to recovery ahead a mere two months after its prediction for of the harshest recession in a century.
The IMF cautions that a revised outlook will feature a more pessimistic view than at the outset of Q2 2020. The ‘great lockdown’ initiated by the COVID-19 pandemic was expected to result in a global economic pull back of three percent in 2020 yet deeper recession fears are intensifying as coronavirus cases accelerate and a vaccine remains beyond the horizon. A gloomier forecast might reflect the IMF’s assessment of the severity of damage caused by the widespread shutdown in activity. The United Kingdom (UK) economy snapped back by 20 percent in the month of April alone for example.
Any glimmers of hope the IMF can impart may channel optimism that the worst of the outbreak has passed in some countries, allowing strict social distancing restrictions to ease. That would align with purchasing manager indexes (PMIs) in key developed economics which are expected to show further improvement in sentiment and activity from historic lows. Most countries still face a long path back to normality from a downturn that bears strikingly similar hallmarks in disparate global economies.
“Both advanced and emerging market economies will endure a recession this year, the first time both have suffered in tandem since the Great Depression of the 1930s” stated IMF Chief Economist Gita Gopinath, who is generating the fund’s forecasts.
“Rapid fire forecast updates reflect the shifting trajectory for the virus. Some countries, including China and Germany, have successfully bent the curve. Others have not. Add up that messy reality and despite green shoots of recovery in May and June the outlook continues to deteriorate” stated Bloomberg Chief Economist, Tom Orlik.