The International Monetary Fund (IMF) may further downgrade its projections for economic growth this year as the coronavirus pandemic continues to have a domino effect on the entire global economy.
In its latest outlook, the fund said the world is likely to face the worst recession since the Great Depression, estimating that the global economy will contract sharply by three percent in 2020. However, even this forecast might be too optimistic for the current “extremely challenging conditions,” and the next IMF outlook, set to be released on June 24, may offer an even gloomier perspective.
“We are likely to revise downward further on the basis of incoming data, which tells us that most countries are doing worse than we had projected,” IMF Managing Director Kristalina Georgieva said in her address to Italian policymakers who convened for the National Consultation. She added that the positive developments in some states are not enough to change the situation.
Georgieva also noted that the unprecedented crisis has led to “a stunning reversal of fortunes” as per capita incomes in 170 countries are set to decrease, overturning earlier projected growth.
However, the IMF still hopes that the situation is slowly changing from what it calls “The Great Lockdown,” when production is halted and consumption is low, towards reopening. This, in turn, is set to evolve into the third phase: recovery. As the world enters the recovery stage – possibly in 2021 – Europe must begin to overcome the gap that has grown in digital, Georgieva said, as the crisis has shown the enormous potential of the sector.