July 10, 2020
AliExpress WW
IMF lowers global economic outlook and warns of rising debt

IMF lowers global economic outlook and warns of rising debt

AliExpress WW

Brazilian Anita, the Marubo ethnic group, is notified that she has contracted a new coronavirus from a member of the medical team of the Armed Forces of Brazil.

AliExpress WW

EVARISTO SA

The International Monetary Fund on Wednesday again reduced its economic forecasts and warned that public finances would deteriorate significantly as governments try to deal with the effects of the coronavirus crisis.

Currently, the IMF estimates a decrease in world GDP (gross domestic product) of 4.9% in 2020, which is less than the forecasted fall of 3% in April.

“The Covid-19 pandemic had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously anticipated,” the IMF said in a Wednesday update on “World Economic Outlook” .

The fund also lowered its forecast for GDP for 2021. He currently expects a growth rate of 5.4% compared with a 5.8% forecast in April (a positive value reflects the fact that economic activity will come from a lower base after a strong recession in 2020).

The Washington institution explained that the downward revision was due to social distance measures, which are likely to remain valid in the second half of the year, while productivity and supply chains will suffer. And in those countries that continue to face high rates of infection, the Fund expects longer blocking periods to further affect economic activity.

Global public debt is projected to reach over 100% of GDP this year.

The IMF warned that forecasts are surrounded by unprecedented uncertainty, and economic activity will depend on factors such as the duration of the pandemic, voluntary social distance, changes in global supply chains, and new labor market dynamics.

“Catastrophic” blow to labor markets

“A sharp decline in activity is accompanied by a catastrophic blow to the global labor market,” the IMF said on Wednesday, indicating that a global reduction in working hours in the second quarter of the year is likely to be equivalent to a loss of more than 300 people. million full-time jobs.

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John Sommers II

“The blow to the labor market was especially acute for low-skilled workers who do not have the opportunity to work at home. Income losses also appeared to be uneven by gender, with women from low-income groups doing more damage. influence in some countries, “said the IMF.

US economy will shrink by 8%

Looking at country forecasts, the United States is expected to fall by 8% this year. The fund estimated a decline of 5.9% in April.

Similarly, the Fund also lowered its forecasts for the eurozone, and now there is a contraction of the economy by 10.2% in 2020.

Brazil, Mexico and South Africa are also expected to fall by 9.1%, 10.5% and 8% respectively.

To mitigate some of the economic consequences of the pandemic, governments around the world have announced massive budget packages and new borrowings. As a result, public finances are deteriorating significantly.

“The sharp decline in economic activity and budget revenues, as well as significant financial support, have expanded public finances even more, and it is forecasted that global public debt will reach more than 100% of GDP this year,” the Fund said.

According to the IMF baseline scenario, global public debt will reach a record level in 2020 and 2021, amounting to 101.5% of GDP and 103.2% of GDP, respectively. In addition, the average overall budget deficit this year will increase to 13.9% of GDP, which is 10 percentage points higher than in 2019.

According to Johns Hopkins University, more than 9 million confirmed Covid-19 infections have been reported worldwide. The United States, Brazil, and Russia are currently the countries with the largest number of cases in the world.

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