WASHINGTON – The International Monetary Fund foresees a steep fall in international growth this year as the global economy struggles to recover from the pandemic-induced recession, its worst collapse in nearly a century.
The IMF estimated Tuesday that the global economy will shrink 4.4% for 2020. That would be the worst annual plunge since the Great Depression of the 1930s. By comparison, the international economy contracted 0.1% after the 2008 financial crisis.
The monetary fund's forecast for 2020 in its latest World Economic Outlook does represent an upgrade of 0.8 percentage point from its forecast in June. The IMF attributed the slightly less dire forecast to faster-than-expected rebounds in some countries, notably China, and to government aid that was enacted by the United States and other major industrial countries.
While forecasting a global contraction this year, after 2.8% growth in 2019, the IMF predicts a rebound to growth of 5.2% next year.
The 189-nation lending agency cautioned that many developing countries, notably India, are faring worse than expected, in large part because of a resurgent virus. Many nations face the threat of economic reversals if government support is withdrawn too quickly, the IMF warned.
“While the global economy is coming back, the ascent will be long, uneven and uncertain,” Gita Gopinath, the IMF's chief economist, wrote in the new outlook. “Recovery is not assured while the pandemic continues to spread.”