The International Monetary Fund, an organization dedicated to ensuring global economic stability, has issued a concerning forecast. Without a coordinated plan to address the aftermath of the pandemic, the IMF predicts a severe global recession on the scale not seen since the Great Depression of the 1930s. This potential recession could last well into the next year.
In more detail, the IMF anticipates a contraction in global Gross Domestic Product (GDP) of around 3%, a more severe decline than experienced during the 2008 recession. This stands in stark contrast to the IMF’s January 2020 prediction of a 3.3% growth in GDP before the onset of the COVID-19 crisis.
Described as the “Great Lockdown,” the IMF projects a significant reduction in global growth. While a partial recovery is anticipated in 2021, GDP levels are expected to remain below pre-virus trends, with significant uncertainties surrounding the strength of the rebound. The IMF representatives conveyed to CNN that there is potential for even more severe growth outcomes.
The IMF raises the alarm on a potentially dire economic crisis worldwide. The containment efforts for the pandemic are estimated to result in millions of job losses and the closure of tens of thousands of businesses. The United States has already witnessed a glimpse of this future, with unemployment expected to rise to 10.4% based on IMF estimates.
The IMF’s calculations suggest that if this substantial recession materializes, the global economy might recover by 2021, with an anticipated GDP growth rate of 5.8%. However, this projection relies on successful containment of the coronavirus by the latter half of 2020.
