The International Monetary Fund issued a stark warning about economic damage from the coronavirus, saying on Tuesday that the global economy faces its worst downturn since the Great Depression as shuttered factories, quarantines and national lockdowns cause economic output around the world to collapse.
In its World Economic Outlook, the I.M.F. projected that global growth will contract by 3 percent in 2020, an extraordinary reversal from earlier this year, when the fund forecast that the world economy would outpace 2019 and grow by 3.3 percent. This year’s fall in output would be far more severe than the last recession, when the world economy contracted by less than 1 percent between 2008 and 2009. A 3 percent decline in global output would be the worst since the Great Depression, the I.M.F. said.
“As countries implement necessary quarantines and social distancing practices to contain the pandemic, the world has been put in a Great Lockdown,” said Gita Gopinath, chief economist of the I.M.F. “The magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetimes.”
Ms. Gopinath said that the loss of global output will be “far worse” than the 2008 financial crisis and that policymakers are facing an unusual predicament in that traditional stimulus measures are little match for a pandemic that is being fought with shutdowns and quarantines.
“It is very likely that this year the global economy will experience its worst recession since the Great Depression,” she said.
Considerable uncertainty remains, she noted, as the health of the economy will be dictated by the trajectory of the virus. If the pandemic persists into the second half of the year, the contraction could be twice as severe and the anticipated rebound in 2021 could fail to materialize if additional waves of the virus spread later in the year. Over the next two years, the pandemic could shave $9 trillion from global gross domestic product or G.D.P.
Tentatively, the fund projects growth to rebound to 5.8 percent next year.
In 2020, the I.M.F. projects that growth in the United States will fall by 5.9 percent. In the Euro area, growth will fall by 7.5 percent, led by steep declines in Italy and Spain.
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