IMF Predicts Global Recession in 2020 and Recovery in 2021

The coronavirus pandemic will cause a global recession in 2020, which may be worse than the one triggered by the global financial crisis of 2008–2009, but global economic growth should recover in 2021. It was reported by Reuters with reference to a statement by the International Monetary Fund (IMF).

IMF President Kristalina Georgieva praised the extraordinary financial measures undertaken by many countries to strengthen health systems and protect affected companies and workers, as well as the steps taken by central banks to ease monetary policy.

“It will take even more, especially in the public sector,” she said.

Georgieva noted that the prospects for global growth were negative, and now the IMF expects “a recession, at least as bad as during the global financial crisis or worse.”

Earlier this month, Georgieva warned that global growth in 2020 will be below the 2.9% level (observed in 2019), but did not predict a recession.

On Monday, March 23, Georgieva said the recovery is expected in 2021, but countries need to strengthen their health systems to achieve it.

“The impact on the economy will be serious, but the sooner we stop the virus, the faster and more powerful the recovery will be,” she said.

Georgieva said that the IMF will significantly increase funding, noting that 80 countries have already requested help and that the IMF is ready to use all its credit resources in the amount of $1 trillion.

Developed economies are better prepared for the crisis, but many emerging markets and low-income countries face serious challenges, including capital outflows. According to Georgieva, investors have already withdrawn $83 billion from emerging markets since the crisis began, which is the largest outflow of capital ever recorded.

Author: Marko Vidrih

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