The International Monetary Fund (IMF) has further downgraded its forecasts for the global economy for this year and next.
The IMF now says economic activity in 2020 is likely to decline by almost 5% – nearly two percentage points more than what it predicted in April. It says this is likely to increase so-called “economic scars” as companies close and people lose their jobs.
The international organisation expects the efficiency of businesses that do survive to be undermined by steps to enhance workplace safety and hygiene.
There are forecast downgrades for 2020 in all the individual countries where the report gives details.
The largest change is for India, where the IMF now expects a decline of 4.5% – just a month after it envisaged continued – but much slower – growth for the country.
The IMF now expects a larger hit to consumer spending. The report points out something that is unusual about this downturn, our economics correspondent Andrew Walker says.
Usually people dip into savings, or get help from family and welfare systems to reduce the fluctuations in their spending. Consumer spending usually takes a much smaller hit in a downturn than business investment.
But this time, lockdowns and voluntary social distancing by people who are wary of exposing themselves to infection risks have hit demand, our correspondent adds.
Here are some of the predictions:
- UK: -10.2% this year; +6.3% in 2021
- US: -8% this year; +4.8% in 2021
- Italy and Spain: -12.8% each this year; +6.3% in 2021
- Russia: -6.6% this year; +4.1% in 2021
- China: +1% this year; +8.2% in 2021
- India: -4.5% this year; +6% in 2021
- Brazil: -9.1% this year; +3.6% in 2021