IMF projects global economy to decline by 3% in 2020 amid Covid-19 pandemic

WASHINGTON – The global economy is on track to contract “sharply” by 3 percent in 2020 as a result of the Covid-19 pandemic, much worse than during the 2008-09 financial crisis, according to a World Economic Outlook (WEO) report released by the International Monetary Fund (IMF) on Tuesday.

“The world has changed dramatically in the three months since our last update of World Economic Outlook in January,” IMF Chief Economist Gita Gopinath said at a virtual press conference, noting that the latest projection is 6.3 percentage points lower than the previous estimation.

“As countries implement needed containment measures to control the pandemic, the world has been put in a great lockdown,” Gopinath said. “The magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetimes.”

In addition, many countries face multiple challenges, including health crises, financial crises, and a collapse in commodity prices, all of which “interact in complex ways,” she said.

While noting that policymakers are responding in an “unprecedented” manner by helping households, firms and financial markets, the IMF chief economist said there is still “considerable uncertainty about what the economic landscape will look like when we emerge from this lockdown.”