The Covid-19 pandemic has had more negative impact on economic activities in the first half of 2020 than anticipated by the International Monetary Fund (IMF). The economic recovery in 2021 is also being projected to be slower than previously projected by the Fund.
Thus, the IMF has revised its world economic outlook for 2020 downwards to minus 4.9% growth from minus 3.4% it predicted in April 2020.
The fund also foresees a slower-than-expected recovery as it cut its expectations for global growth in 2021 to 5.4% from 5.8%.
These projections imply a cumulative loss to the global economy over two years (2020–21) of over $12 trillion from this crisis.
IMF is also projecting that Nigerian economy will contract by minus 5.4% in 2020 and a 2.6% growth in 2021.
Of all the countries represented on the IMF world economic outlook table, only China has a positive growth of 1.0% in 2020.
The US and UK economy is projected to contract by 10.2% each. Italy and Spain will grow by minus 12.8% each whereas France will experience minus 12.5% growth in 2020.
Overall, the new forecast would leave 2021 GDP more than six percentage points lower than in the IMF’s pre-COVID projections of January 2020, according to the report.
According to IMF its world economic outlook has high level of uncertainty with the basic assumption revolving around Covid-19 pandemic.
“In economies with declining infection rates, the slower recovery path in the updated forecast reflects persistent social distancing into the second half of 2020.
“For economies struggling to control infection rates, a lengthier lockdown will inflict an additional toll on activity.”
“The global community must act now to avoid a repeat of this catastrophe by building global stockpiles of essential supplies and protective equipment, funding research and supporting public health systems, and putting in place effective modalities for delivering relief to the neediest.”
“The lockdown imposed in majority of countries around the world have “triggered the worst recession since the Great Depression” Gita Gopinathis the Economic Counsellor and Director of the Research Department at the International Monetary Fund (IMF).
Several countries have started to reopen and recover from the devastating effect of the lockdown.
Gopinath noted that “in the absence of a medical solution, the strength of the recovery is highly uncertain and the impact on sectors and countries uneven.”
The IMF is also projecting that public debt this year will reach the highest level in recorded history in relation to GDP, in both advanced and emerging market and developing economies.
Countries will need sound fiscal frameworks for medium-term consolidation, through cutting back on wasteful spending, widening the tax base, minimizing tax avoidance, and greater progressiveness in taxation in some countries.