The IMF has lowered its projections this year. Global GDP will fall by 3%. It is worse for the Euro area, with a 7.5% decline
IMF analysts have lowered their estimates for this year’s global economy, as the economic news show. They are now estimating that this will weaken by 3% this year. Mainly due to the harmful effects of the coronavirus pandemic. The latest January estimate expected an increase of 3.3%. Caused by the epidemic situation, this year’s outcome is likely to be very rough. Even the worst since the Great Depression of the 1930’s.
For 2021, fund analysts expect a growth of 5.8%, compared to January’s 3.4%. The increase in the growth rate is primarily related to a lower benchmark. Overall, the level of the economy should be below the original trend. It did not have to take into account the effect of the coronavirus crisis.
According to IMF analysts, the pace of recovery in 2021 is exceptionally uncertain with many risks and, in fact, challenging to predict. Like all consequences that will bring restrictive measures. This year, the US economy will weaken by 5.9%. The euro area by 7.5%. China will slow growth to 1.2%. And this is not very good for our economic news. GDP could fall by 9.1% in Spain. And by 8% in Italy.
The IMF recommends that countries concentrate primarily on the health crisis. Governments should subsequently provide tax relief, wage support, and direct cash assistance to residents or businesses. Other organizations also estimate a dramatic slowdown in global economic development. For example, the WTO has determined that this year’s international trade activity will fall from 13 to 32%.
The IMF also said that it had received an unprecedented number of emergency funding requests. Approximately 90 have already applied for assistance from 189 members.
Goldman: The adverse effects of coronavirus will be four times higher than in the financial crisis
According to Goldman Sachs analysts, the adverse economic effects of the coronavirus epidemic will be rough. Almost four times higher than the 2008/9 financial crisis, as the Economic news. In 2020, economic activity will decline by 35% q/q and 11% y/y. The unemployment rate could jump up to 15%. Analysts say a sharp recovery in the second half of the year will be stronger than ever.
The initial recovery in markets were pulled mainly due to the outlook of the positive effect of fiscal measures. In recent days the positive mood stems from the development of the epidemic itself. The number of infected people seems to culminate. The predictions of the number of deaths tend to decrease. Estimates of hospital occupancy go down.
Concerning the restart of the economy, the analysts of the bank indicated that it is not possible to count on the regular activity. At least until a functional drug or vaccine is available. Part of the outage will be restored thanks to advanced testing and population monitoring. For example, in the automotive sector, analysts expect capacity utilization at 25% in April, and 70% in May. But, for that to know, we will need to follow the latest economic news.
The economic recovery will subsequently rise to unprecedented levels. In 3Q, GDP could grow by 19% q/q, and another 12% in 4Q. Bank analysts praised the government’s response, stating that it will be necessary to support the economy further. This to replace as much as possible the lost revenue. Especially in the private sector. Also, to maintain the consumer demand.
