IMF has lowered again its world economic perspectives

9th July 2020
-News, IAM

Hugues Chevalier, Economist

The IMF, which published its latest world economic perspectives on June 24th, has drastically lowered the growth figures for both 2020 and 2021, from -3% last April to -4.9% now. The monetary institution sees a much stronger contraction of the production during the 1st half of this year and that the ‘social distancing’ measures which will last during the 2nd half of the year will again impact the economic activity. For 2021, the IMF has lowered again its growth perspectives to -5.4% only. Many risks could still derail this rebound process particularly the ongoing pandemic and the danger of a financial crisis in the emerging countries due to lower commodities prices and declining world trade. Estimates made by the IMF for the total cost of this crisis reach now 12 000 billion of USD. In details, the contraction of the GDP in the OECD countries should reach 8%, and 12.8% for the most impacted countries such as Spain or Italy. Only the United States and Germany should perform better with a decline of around 8% only. However, the consequences could have been much worse if the industrialised countries had not activated both monetary and fiscal policies. In total, the fiscal input is estimated at 10 000 billion of USD. Therefore, fiscal deficit will jump at 16.5% of the GDP for the OECD countries this year and the public debt at 130% of the GDP. But the acceleration of the new contamination in the world does not predict any strong economic rebound soon…

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