Jubilee Post News & Views
Special Desk
International Monetary Fund has predicted a decline of almost 5% in 2020 hence has lowered its global growth forecast for this year and even the next year. This in the wake of the coronavirus pandemic.
IMF predicts a decline substantially worse than its forecast only 10 weeks ago in April. The UK economy is expected to contract more than 10% this year, followed by a partial recovery in 2021.
That would be one of the most severe declines, although not as deep as forecast for Italy, France or Spain. IMF managing director, Kristalina Georgieva, had already warned that the April forecast had been overtaken by events, and that the likely path of the global economy was looking worse.
That is reflected in the new projections for both the world and the British economy. The recession caused by the pandemic – globally and in many individual countries – is likely to be deeper than the IMF previously thought. The previous April forecasts were a 6.5% decline for the UK and 3% for the world.
The gloomier outlook partly reflects the fact that data since April have pointed to a sharper downturn than the earlier forecast envisaged. The IMF how expects a larger hit to consumer spending. The report points out something that is unusual about this downturn.
But this time, lockdowns and voluntary social distancing by people who are wary of exposing themselves to infection risks have hit demand. The IMF also expects people to do more “precautionary saving”, reducing their consumption because of the uncertain outlook ahead.
There is also a danger that, for firms that do survive, their efficiency is likely to be in undermined by the steps they take to improve safety and hygiene – to reduce the risk of workplace transition of the coronavirus.
The predicted declines in activity are however not quite as severe as what was forecast earlier this month by the Organisation for Economic Cooperation and Development.
