The International Monetary Fund foresees a steep fall in international growth this year as the global economy struggles to recover from then coronavirus pandemic-induced recession.
The IMF has estimated that the global economy will shrink 4.4% for 2020. That would be the worst annual plunge since the Great Depression of the 1930s. By comparison, the international economy contracted by a far smaller 0.1% after the 2008 financial crisis.
The monetary fund's forecast for 2020 in its latest World Economic Outlook does represent an upgrade of 0.8 percentage points from its previous forecast in June. The IMF attributed the slightly less dire forecast to faster-than-expected rebounds in some countries, notably China, and to government rescue aid that was enacted by the United States and other major industrial countries.
But the 189-nation lending agency warned that many developing countries, notably India, are faring worse than expected, in large part because of a resurgent virus. Many nations face the threat of economic reversals if government support is withdrawn too quickly, the IMF warned.
"While the global economy is coming back, the ascent will be long, uneven and uncertain," Gita Gopinath, the IMF's chief economist, wrote in the new outlook. "Recovery is not assured while the pandemic continues to spread."
While forecasting a global contraction this year after 2.8% growth last year, the IMF predicts a rebound to global growth of 5.2% next year, 0.2 percentage points lower than in its June forecast.
For the United States, the IMF forecasts an economic contraction of 4.3% this year, 3.7 percentage points better than in its June forecast. The less pessimistic outlook reflects a stronger-than-expected bounce from the 3 trillion US dollars in relief aid that Congress enacted earlier this year.
For next year, the IMF envisions 3.1% growth in the United States, 1.4 percentage points less than in its June outlook and in line with the view of private forecasters. Last year, the US economy grew 2.2%.
China, the world's second-largest economy, is expected to grow 1.9% this year, a sharp slowdown from the 6.1% gain in 2019, and then expand 8.2% in 2021.
The IMF said that while a swift recovery in China had surprised forecasters, the global rebound remains vulnerable to setbacks. It noted that "prospects have worsened significantly in some developing countries where infections are rising rapidly" and that in India and in poorer nations in Africa and Asia, the pandemic has continued to spread and in some areas even accelerate.
"Preventing further policy setbacks," the IMF said, "will require that policy support is not prematurely withdrawn."
The monetary fund predicted that the eurozone, which covers the 19 European nations that use the euro currency, would contract 8.3% this year but rebound 5.2% next year.
