Corona pushes the world economy into its deepest recession in a century

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IMF: Corona pushes the world’s economy into its deepest recession in a century, today, Tuesday, April 14, 2020 06:42 pm

The International Monetary Fund said today, Tuesday, that the Covid-19 epidemic is pushing the world economy to the deepest recession in a century, with global output dropping three percent this year.
According to the IMF’s World Economic Outlook, the global economy will be able to achieve a 5.8 percent recovery in 2021 if the virus is contained and the economic movement returns to normal.
But he acknowledged the difficulty of setting accurate forecasts in a rapidly evolving situation.
The Fund warned of “great risks of a worse outcome” due to “severe uncertainty regarding the strength of the recovery” at a time when closure measures were imposed in most of the countries of the world in light of efforts to contain the epidemic and prevent the collapse of health care systems.
The report expected the US economy to contract by 5.9 percent, but at the same time it expected recovery next year, with a growth of 4.7 percent.
However, the forecast is based on the assumption that the virus will disappear in the second half of the year.
The fund cautioned that “much worse growth outcomes are possible, but likely (…) if the epidemic and containment measures remain for a longer period, and developing and emerging economies are affected more (…) or if widespread adverse repercussions arise because of corporate closures and widespread unemployment.” “.
About two million people worldwide were infected with the Covid-19 epidemic caused by the emerging coronavirus, 120,000 of whom have died, while travel has almost completely stopped and businesses, shops and restaurants have been forced to close.
The “Great Close”, the term the International Monetary Fund has used to refer to the current global recession, is the worst since the “Great Depression” of the 1930s.
It is also the first contraction since the global financial crisis in 2009, although there is no comparison between the two cases. Although the repercussions remained for a relatively long period at the time, the decline was only 0.1 percent, while emerging market economies were growing at a steady pace.
The International Monetary Fund stressed that a severe recession is “unavoidable” but “concrete and targeted financial and monetary” measures can be taken to alleviate the crisis and ensure that the economy is placed in a position to resume its activity once the closure measures are completed.
The report stated that “economic policies will have to mitigate the repercussions of reduced activity on people, companies and the financial system” and prevent “harmful effects” of large-scale bankruptcies.
Many governments have approved massive spending packages in cooperation with central banks that are pumping liquidity into the financial system to prevent any collapse.
But the International Monetary Fund also said that “strong multilateral cooperation is absolutely necessary to overcome the repercussions of the global epidemic.”
Concurrent measures can carry “bigger impacts”, and they can also avoid some of the mistakes of the last century when countries adopted “sterile trade policies (…) that made the global economic downturn worse.”
The report called for “reducing barriers, whether fees or others, that hinder cross-border trade and global supply chains.”
The recovery in 2021 is largely dependent on the epidemic fading in the second half of 2020, “allowing for efforts to gradually contain the (virus) containment and restoring the confidence of consumers and investors”.
In the event that the “major closure” protects or prolongs the virus again next year, or both occur together, the expected recovery in 2021 may be 8 percent worse than the current forecast, according to the report.
The report stressed that finding a cure for the virus is the only sure way forward.

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