IMF Says Global GDP to Shrink 3% / Asian Economy to Zero Growth for 1st Time in 60 Years

The International Monetary Fund or IMF predicted global economy will shrink 3% this year due to the  great lock down that was applied by many countries as a tool to control the covid-19 outbreak.

 

IMF said on Tuesday that a coronavirus pandemic is “like no other”, the world has been put in a great lock down to control the virus outbreak, the collapse of economic activities is something inevitable. This is the crisis that the world has not experienced before and it is uncertain to predict the impact on both people lives and livelihood, but “It is very likely that this year, the global economy will experience its worst recession since the Great Depression, surpassing that seen during the financial crisis a decade ago,”

 

In January, IMF had estimated a 2020 global GDP to grow by 3.3%, otherwise 3 month later a sudden emerged of virus contagion, the fund has adjusted the estimation and replaced it with an expected contraction of 3%, much worse than during the 2008–09 financial crisis.

 

This forecast based on a scenario that “the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound”. IMF also predicted the economy worldwide to grow by 5.8% in 2021 in case economic activity normalizes.

 

Economies in Asia

 

While predicted the Asia’s economic growth this year to underline of zero growth for the first time in 60 years.

 

“This is a crisis like no other. It is worse than the Global Financial Crisis, and Asia is not immune. While there is huge uncertainty about 2020 growth prospects, and even more so about the 2021 outlook, the impact of the coronavirus on the region will—across the board—be severe and unprecedented.” Changyong Rhee, director of the IMF’s Asia and Pacific Department published on IMFBlog.

 

The economic recession even “worse than the annual growth rates throughout the Global Financial Crisis (4.7%), or the Asian Financial Crisis (1.3%),”, but Asia still looks to fare better than other regions in terms of activity.

 

Two main factors to shape the outlook for Asia are the Global slowdown due to “Asian key trading partners are expected to contract sharply, including the United States by 6.0 percent and Europe by 6.6 percent” and China slowdown.

 

IMF expected Thailand to experience large contractions as much as 6.7%, compared to a previous forecast of Thai GDP to grow by 3%.