Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Global economic recession may be ‘less severe though still deep’, IMF says

Global economic recession may be ‘less severe though still deep’, IMF says

Although new data suggests many economies are recovering at a faster pace than anticipated after reopening from lockdowns, International Monetary Fund says recovery is not assured as pandemic spreads.
The world economy will experience a “less severe though still deep” recession this year than previously expected, as prospects have worsened significantly in some developing economies while large advanced economies have reported stronger-than-expected growth out-turns, the International Monetary Fund (IMF) said on Tuesday.

The IMF’s World Economic Outlook estimated that the global economy will contract by 4.4 per cent this year – a less severe contraction than the 4.9 per cent downturn it forecast in June. And growth in 2021 is projected to rebound to 5.2 per cent, or 0.2 percentage points lower than the June estimate.

Even though recent data suggests that many economies have started to recover at a faster pace than anticipated after reopening from the so-called Great Lockdown, the recovery is not assured while the pandemic continues to spread, the IMF warned.

Prospects for China are much stronger than for most other emerging market and developing economies, and it is projected to be the only G20 economy to record positive growth this year.

China’s economy looks to grow 1.9 per cent this year, an upgrade of 0.9 percentage points from the IMF’s forecast in June, given signs that the recovery accelerated in the third quarter. The world’s second-largest economy is still expected to grow 8.2 per cent next year, unchanged from the IMF’s projection in June.“While the recovery in China has been faster than expected, the global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks … [which] will likely be long, uneven and uncertain,” the report said.

Emerging market and developing economies other than China are projected to contract 5.7 per cent in 2020 before posting growth of 5 per cent in 2021. However, the projected rebound next year will not be sufficient enough to return to the 2019 level of activity by the end of next year, the IMF said.

“Regional differences remain stark, with many countries in Latin America severely affected by the pandemic facing very deep downturns, and large output declines expected for many countries in the Middle East and Central Asia region, and oil-exporting countries in sub-Saharan Africa affected by low oil prices, civil strife or economic crises,” the report said.

The Covid-19 pandemic has sickened nearly 38 million people worldwide, with the global death toll having surpassed 1 million.

The pandemic will reverse the progress made since the 1990s in reducing global poverty and will increase inequality, as close to 90 million people could fall below the US$1.90-a-day income threshold of extreme deprivation this year, the IMF said.

Developed countries will fare better.

The US economy is expected to contract 4.3 per cent this year before growing 3.1 per cent in 2021, while the Eurozone economy is estimated to shrink 8.3 per cent in 2020 and to grow 5.2 per cent in 2021.

The US economy contracted at an annualised rate of 31.4 per cent in the second quarter but posted strong annualised growth of more than 30 per cent in the third quarter. China’s year-over-year growth rate was expected to accelerate to 5.5 per cent in the third quarter from 3.2 per cent growth in the second quarter. This is equivalent to a 13.2 per cent annualised growth rate in the third quarter, after an annualised surge of 46 per cent in the second quarter.

On Tuesday, China’s imports posted their biggest surge since before the Covid-19 pandemic as its trade recovery continues to gather steam. The country’s exports grew by 9.9 per cent in September compared with a year earlier, while imports surged by 13.2 per cent – the first growth of inbound shipments since June, according to China’s customs data.

Chinese economic activity normalised faster than expected this year after most of the country reopened in early April, and its second-quarter GDP registered a positive surprise on the back of strong policy support and resilient exports, according to the IMF.

The IMF projections were made based on assumptions that social distancing will continue into 2021 but will subsequently fade over time as vaccine coverage expands and therapies improve. Local transmission is assumed to be brought to low levels everywhere by the end of 2022.

Thus, following the contraction in 2020 and recovery in 2021, the level of global GDP in 2021 is expected to be a modest 0.6 per cent above that of 2019. After the rebound in 2021, global growth is expected to gradually slow to about 3.5 per cent into the medium term, the report said.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Hungary Ranked Among the World’s Safest Travel Destinations for 2025
G7 Leaders Fail to Reach Consensus on Key Global Issues
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Shock Within Iran’s Leadership: Khamenei’s Failed Plan to Launch 1,000 Missiles Against Israel
Wreck of $17 Billion San José Galleon Identified Off Colombia After 300 Years
Man Convicted of Fraud After Booking Over 120 Free Flights Posing as Flight Attendant
Iran Launches Extensive Missile Attack on Israel Following Israeli Strikes on Nuclear Sites
Beata Thunberg Rebrands as Beata Ernman Amidst Sister's Activism Controversy
Hungarian Parliament Approves Citizenship Suspension Law
Prime Minister Orbán Criticizes EU's Ukraine Accession Plans
Hungarian Delicacies Introduced to Japanese Market
Hungary's Industrial Output Rises Amid Battery Sector Slump
President Sulyok Celebrates 15 Years of Hungarian Unity Efforts
Hungary's Szeleczki Shines at World Judo Championships
Visegrád Construction Trends Diverge as Hungary Lags
Hungary Hosts National Quantum Technology Workshop
Hungarian Animation Featured at Annecy Festival
Israel Issues Ultimatum to Iran Over Potential Retaliation and Nuclear Facilities
UK and EU Reach New Economic Agreement
Coinbase CEO Warns Bitcoin Could Supplant US Dollar Amid Mounting National Debt
Trump to Iran: Make a Deal — Sign or Die
Operation "Like a Lion": Israel Strikes Iran in Unprecedented Offensive
Israel Launches 'Operation Rising Lion' Targeting Iranian Nuclear and Military Sites
UK and EU Reach Agreement on Gibraltar's Schengen Integration
Israeli Finance Minister Imposes Banking Penalties on Palestinians
U.S. Inflation Rises to 2.4% in May Amid Trade Tensions
Trump's Policies Prompt Decline in Chinese Student Enrollment in U.S.
Global Oceans Near Record Temperatures as CO₂ Levels Climb
Trump Announces U.S.-China Trade Deal Covering Rare Earths
Smuggled U.S. Fuel Funds Mexican Cartels Amid Crackdown
Austrian School Shooting Leaves Nine Dead in Graz
Bezos's Lavish Venice Wedding Sparks Local Protests
Europe Prepares for Historic Lunar Rover Landing
Italian Parents Seek Therapy Amid Lengthy School Holidays
British Fishing Vessel Seized by France Fined €30,000
Dutch Government Collapses Amid Migration Policy Dispute
UK Commits to 3.5% GDP Defence Spending Under NATO Pressure
Germany Moves to Expedite Migrant Deportations
US Urges UK to Raise Defence Spending to 5% of GDP
Israeli Forces Intercept Gaza-Bound Aid Vessel Carrying Greta Thunberg
IMF Warns of Severe Global Trade War Impacts on Emerging Markets
Low Turnout Jeopardizes Italy's Citizenship Reform Referendum
Transatlantic Interest Rate Divergence Widens as Trump Pressures Powell
EU Lawmaker Calls for Broader Exemptions in Supply Chain Legislation
France's Defense Spending Plans Threatened by High National Debt
European Small-Cap Stocks Outperform U.S. Rivals Amid Growth Revival
Switzerland Proposes $26 Billion Capital Increase for UBS
×