IMF revises global growth 6.3% downwards

CAPE TOWN – The International Monetary Fund (IMF) yesterday revised global growth 6.3percent downwards from its January estimates, charging that lockdowns implemented in most countries to deal with the coronavirus pandemic would lead to the worst recession since the Great Depression of the 1930s and would be worse than the 2008 financial meltdown.

The lender said the global economy would decline -3percent this year, with South Africa expected to decelerate to -5.8percent as a result of the pandemic.

“As countries implement necessary quarantines and social distancing practices to contain the pandemic, the world has been put in a Great Lockdown,” the IMF said in this month’s world economic outlook. “The magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetimes.”

The IMF said although governments were providing unprecedented support to households, businesses and financial markets, there was considerable uncertainty about what the economic landscape would be after the pandemic. It said its forecast assumed that the pandemic and required containment would peak in the second quarter and recede in the second half of this year.

The lender said if the pandemic faded as predicted and policy actions were effective in preventing widespread bankruptcies, job losses, and system-wide financial strains, global growth would rebound to 5.8percent next year. “This recovery in 2021 is only partial, as the level of economic activity is projected to remain below the level we had projected for 2021, before the virus hit,” the IMF said.