IMF revises its global GDP forecast higher, but warns the economy ‘remains prone to setbacks’
The International Monetary Fund on Tuesday turned slightly more positive on the global economy for this year, but warned of a “long, uneven and uncertain” recovery.
The global economy is now projecte to contract by 4.4% in 2020 — an upward revision from an estimate of -4.9% made in June (which has now also been revised to -5.2% due to a new methodology used by the IMF).
The IMF’s forecast assumes that social distancing due to the coronavirus pandemic will continue into 2021, and that local transmission will fall everywhere by the end of 2022.
Emerging market and developing economies are seen contracting by 3.3% this year, but in places like India, GDP is seen falling by more than 10%.
Meanwhile, the United States economy is set to fall by 4.3% this year, but the economic contractions in the U.K., France, Italy and Spain are around 10%.
The recovery “is not assured while the pandemic continues to spread,” the IMF said in its latest economic analysis.
The IMF has advised governments to keep some degree of accommodative policies to prevent a wider gap in income distribution, despite growing levels of public debt.
National debt in advanced economies is set to reach 125% of GDP by the end of 2021 and to rise to about 65% of GDP in emerging markets during the same period.
Reference: CNBC
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