The International Monetary Fund (IMF) has predicted a gloomy global economic recession for 2020.
The body said the COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and recovery is projected “to be more gradual than previously forecasted.”
The fund today said the global economy is expected to contract 4.9 per cent this year, 1.9 per cent below the April 2020 World Economic Outlook (WEO) forecast.
For 2021, the fund anticipated growth of 5.4 per cent, down from the 5.8 per cent that it earlier forecast.
While giving its April projection, the fund warned that the global economy is plunging into its deepest slump since the Great Depression of the 1930s adding that governments and health officials must work together to prevent an even worse outcome.
In an update to the WEO, it said economic data released since April suggest “even deeper downturns than previously projected for several economies.”
It said for economies struggling to control infection rates, a lengthier lockdown will inflict an additional toll on activity.
“The steep decline in activity comes with a catastrophic hit to the global labour market.
“The hit to the labor market has been particularly acute for low-skilled workers who do not have the option of working from home. Income losses also appear to have been uneven across genders, with women among lower-income groups bearing a larger brunt of the impact in some countries,” it said.
It said the synchronized nature of the downturn amplified domestic disruptions around the globe.
“Trade contracted by close to –3.5 per cent (year over year) in the first quarter, reflecting weak demand, the collapse in cross-border tourism, and supply dislocations related to shutdowns.”
It also mentioned depressed mobility, contracted global trade and weaker inflation as part of the economic fallouts.
The fund said all regions are projected to experience negative growth in 2020.
“There are, however, substantial differences across individual economies, reflecting the evolution of the pandemic and the effectiveness of containment strategies; variation in economic structure (for example, dependence on severely affected sectors, such as tourism and oil); reliance on external financial flows, including remittances; and pre-crisis growth trends.”
Experts opine that the disruptions due to the pandemic, as well as significantly lower disposable income for oil exporters after the fuel price decline, will imply a sharp recession for nations like Russia, Saudi Arabia and Nigeria.
The Nigeria economy is expected to shrink by 5.4 per cent this year.