Earlier this year, in April 2020, the International Monetary Fund (IMF) released the April edition of its flagship World Economic Outlook report. It was released more-or-less at the beginning of the COVID-19 crisis when semi-lockdowns were imposed across the world (while China was near its full recovery). The report was, however, outdated within a few days as it presented a much too positive picture about global economic growth in 2020, and a much too optimistic picture of a quick and sharp recovery in 2021. In all fairness, the IMF did emphasize at the time that its outlook might need a revision soon because of the uncertain environment.

As a few months have passed by, the Washington-based institution has now revised its outlook in its latest update titled: ‘World Economic Outlook Update, June 2020: A Crisis like No Other, An Uncertain Recovery’. The IMF now projects global gross domestic product (or GDP) to contract by 4.9 percent year-on-year (y/y) in 2020, down from its earlier projection of minus 3 percent (y/y). It added that the COVID-19 crisis could be much worse than the Great Depression as the COVID-19 pandemic is causing an unprecedented drop in global activity, while the global labor market has taken a catastrophic hit, global consumer spending is plunging, and companies have significantly cut back on business investment.

Gita Gopinath, IMF Chief Economist, remarked that for the first time since the Great Depression, both advanced and emerging market economies will be in recession in 2020. There is one exception, namely China that is expected to record growth of 1 percent (y/y), in part because the country got a head start on its recovery.

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