THE International Monetary Fund expects the global economy to slow down more this year than during the 2008/2009 financial crisis.
The estimates are that the global economy will contract sharply by 3% in 2020, before returning to a 5,8% in 2021 as economic activity normalises.
According to Gita Gopinath, the fund’s chief economist, the Covid-19 pandemic is inflicting high human costs worldwide, and the necessary protection measures are severely impacting economic activity.
“As a result of the pandemic, the global economy is projected to dip by 3% in 2020,” Gopinath said.
According to the fund, the return to global economic growth in 2021 would only materialise if necessary policy support is given.
“Because the economic fallout is acute in specific sectors, policy-makers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically,” the fund said.
On an international level, the IMF said strong multilateral cooperation is essential to overcome the effects of the pandemic, including to help financially constrained countries facing twin health and funding shocks, and for channelling aid to countries with weak healthcare systems.
Gopinath said this crisis will need to be dealt with in two phases, a phase of containment and stabilisation, followed by the recovery phase.
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