The International Monetary Fund has said the global economy will take a $12tn (£9.6tn) hit from the Covid-19 pandemic after slashing its already gloomy growth projections for the UK and other developed countries in 2020.
The IMF said it would take two years for world output to return to levels at the end of 2019 and warned that governments should be cautious about removing financial support to their fragile economies. In an update to forecasts published in April, the Washington-based IMF said it now expected the global economy to contract by 4.9% this year, compared with a 3% drop expected in the spring. The IMF said the coronavirus pandemic had been more negative for activity in the first half of 2020 than expected, and recovery was also projected to be slower. Global growth is forecast to be 5.4% in 2021, down from 5.8% in April, but would plummet to zero in the event of a second wave of the pandemic early next year.
Every one of the G7 industrial nations and the leading developing nations has had its growth projection revised down, in what the IMF described as a “crisis like no other”. The near-5% drop in global output this year would be much deeper than the drop of 0.1% recorded in 2009, after the near meltdown of the global banking system the previous autumn. It said the forecasts were subject to an even greater than usual amount of uncertainty and were based on some key assumptions about the fallout from the pandemic: physical distancing persisting into the second half of 2020, long-term scarring from the larger than anticipated damage caused by the lockdown and a hit to productivity as surviving businesses ramped up workplace safety and hygiene practices.
The IMF said it was also assuming that financial conditions, which have eased since the spring, remained broadly at current levels. “Alternative outcomes to those in the baseline are clearly possible, and not just because of how the pandemic is evolving. The IMF advised all countries – including those that had seemingly passed infection peaks – to ensure their healthcare systems were adequately resourced and called on developed countries to ensure that poorer nations had access to adequate, affordable doses of vaccines when they became available.
The IMF said strong multilateral cooperation remained vital to mitigate the impact of the pandemic on the world’s poor. Progress made in reducing extreme poverty since 1990 was at risk. Noting the record drop in greenhouse gas emissions during the pandemic, the IMF said policymakers should implement their climate change mitigation commitments and work together to scale up equitably designed carbon taxation or equivalent schemes.
Source: The Guardian
Finnish site 
Global site