World economy to shrink 3% in 2020, worst setback since 1930: IMF
The IMF slashed its projection by 6.3 percentage points from its estimate in January, when the spread of the coronavirus was just about to intensify in China. But the global economy could bounce back if the epidemic recedes in the second half of this year, with the IMF projecting 5.8 percent growth next year.
The United States -- now the epicenter of the pandemic that was first detected in China late last year -- will see its economy shrink 5.9 percent in 2020, the worst contraction since 1946, according to the IMF's World Economic Outlook report.
The Japanese economy is projected to contract by 5.2 percent, the worst downturn since 2009 at the height of the global financial crisis triggered by the collapse of Lehman Brothers the previous year.
The latest forecasts underscore the economic toll stemming from the highly contagious virus, which has prompted countries around the world to shutter businesses, cancel events and keep people at home in efforts to prevent its spread. More than 1.9 million people have been infected worldwide and over 120,000 people have been killed by the illness, according to a tally by Johns Hopkins University.
«The COVID-19 pandemic differs markedly from past triggers of downturns...there is a de facto shutdown of a significant portion of the economy,» the Washington-based institution said in the report.
«This makes the great lockdown the worst recession since the Great Depression, and far worse than the global financial crisis,» IMF chief economist Gita Gopinath said at a press conference, noting that the cumulative loss to global gross domestic product over 2020 and 2021 from the epidemic could be around $9 trillion.
The figure is «greater than the economies of Japan and Germany combined,» she said.
During the Great Depression, triggered by the 1929 crash of Wall Street, global output saw a contraction of about 10 percent, according to Gopinath. In the 2008-2009 financial crisis, the global economy shrank 0.1 percent.
The IMF also pointed to the «extreme uncertainty» around the global growth forecast, which would be affected by the intensity and efficacy of containment efforts, the extent of supply disruptions and changes in people's behavior due to the pandemic, among other issues.