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IMF: Due to coronavirus, the worst global recession since 1930 0:44
(CNN Spanish) - The International Monetary Fund confirms that due to the covid-19 this 2020 we will experience the worst economic recession in 90 years, surpassing what was seen during the 2008 global financial crisis.
In its most recent report "Global Economic Outlook", the agency estimated a contraction of 3% for the global economy, with an 11% drop in the volumes of trade in goods and services. Just in January, the IMF projected a global expansion of 3.3%
An economic recovery of 5.8% is expected for 2021, although it will be surrounded by much uncertainty; recovery will be less than pre-outbreak levels. The IMF warns that governments and health authorities must work together to avoid a much worse picture and in the two phases of the crisis: containment and stabilization, and then in recovery.
At a press conference, Gita Gopinath, IMF economic adviser and director of research, warned that it is very important that restrictions on the movement of people to work, travel, or the alteration of the global supply chain do not become an aspect to reverse globalization, because the expected strong recovery would not materialize: "A strong recovery will not occur if the world becomes globalized," he warned.
The document marks the start of the IMF and World Bank spring meetings, which this year will be held in virtual format. In early March and in light of the rapid spread of the pandemic, they announced the change in format for the meeting, which brings together some 10,000 government officials, businessmen, representatives of civil society and journalists from around the world in Washington.
The IMF explained why this crisis, which it calls "the great isolation" is unprecedented: first, for the losses caused by the health emergency and containment measures, for the "severe and continuous" uncertainty about the duration and intensity of the coup , and because in these circumstances, the role played by economic policy is very different.
“Under normal circumstances, the authorities try to encourage economic activity by stimulating aggregate demand as quickly as possible. This time, the crisis is largely a consequence of necessary containment measures. This makes stimulating activity more challenging and undesirable, at least for the most affected sectors ”, explains Gopinath.
Warns that the economic outlook will change significantly during the crisis and after; that a greater participation of governments and central banks in the economy will be seen.
For the United States, the world's largest economy, the IMF is forecasting a contraction of 5.9% this year, the worst since 1946, but less than the sharp falls it forecasts for European economies.
Regarding China, the epicenter of this outbreak detected at the end of last year, the IMF forecasts growth of 1.2%, in contrast to the expansion of 2019 that was 6.1%, the lowest rate in 30 years. If the forecast is confirmed, it would be its worst performance since 1976.
A contraction of 5.3% is also forecast for Japan, the third largest economy in the world and 7% for Germany.
The European economies hardest hit by the pandemic will see more severe contractions: 9.1% for Italy and 8.0% for Spain, estimates the IMF.
The agency warns that, unlike several developed economies, several emerging nations will need support from developed countries, bilateral creditors and international financial institutions to deal with the simultaneous blow of the health, economic and financial crises. For countries facing large debt obligations, moratoriums and restructuring should be considered.
Regarding Latin America, the IMF forecasts a contraction of 5.2% this 2020 and expects Brazil, the largest economy in that region, to contract 5.3%, but it will be greater in the case of Mexico, where a contraction of 6 is expected. , 6%.
The IMF says that while the economy is paralyzed, authorities must ensure that citizens can meet their needs and that businesses can get up once the most acute phases of the pandemic are overcome.
For this, well-located fiscal, monetary and financial measures are required to maintain economic ties between workers and companies, and also between creditors and debtors "keeping intact the economic and financial infrastructure of society".
In emerging economies with high levels of informality, new digital technologies can be useful to locate supports, among others.
The report underlines that the key will be multilateral cooperation to share experiences and medical teams to support health systems around the world; that a global effort must be made to ensure immediate access to therapies and vaccines to poor and rich countries when they are developed and approved. Gopinath called on countries to refrain from activating export restrictions on medical supplies: "This is not the time to restrict medical equipment and essential equipment worldwide."
But multilateral cooperation is also needed to articulate financial assistance to many emerging and developing nations.
Recession