IMF slashes 2020 global economic outlook and foresees sluggish rebound in 2021
The International Monetary Fund on Wednesday slashed its economic forecast for 2020, saying that the coronavirus pandemic has caused an unprecedented decline in global activity.
In 2021, global growth is expected to rebound to a 5.4% growth rate, down 0.4 percentage points from the April forecast. The recovery is expected to be “sluggish” with the level of GDP still about 6.5 percentage points lower than the pre-COVID-19 projections of January. For the U.S., the IMF cut its forecast for 2020 to negative 8%, which is 2.1% lower than in April. Growth is expected to rise to 4.5% in 2021. China is the only major economy still expected to experience growth this year.The IMF said uncertainty is high and there are several important downside risks. It called for global efforts to help countries facing a health crisis and external funding shortfalls.
There is risk that financial conditions might tighten more than assumed as “the extent of the recent rebound in financial-market sentiment appears disconnected from shifts in underlying economic prospects,” the IMF said.
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