The International Monetary Fund (IMF) is now predicting an even steeper economic drop than their previous forecasts earlier during the pandemic.
In contrast to the decline of 3% predicted in April, the IMF now foresees a 4.9% drop in the global economy, projecting an even deeper recession. As is apparent from the change in their predictions, the IMF admits that high uncertainty accompanies these figures.
The recession is expected to hit both advanced (-8%) and developing (-3%) economies, with countries dependent on travel and tourism economies taking longer to recover than others.
The United States will see a 8% downturn, whereas the EU and the UK are expected to face a 10.2% drop in their economies, the sharpest drop of all the advanced economies. Within the EU, Italy and Spain are expected to be hit the hardest, with a 12.8% downturn.
Of the emerging and developing economies, Mexico is expected to be hit the hardest, seeing a 10.5% drop in its economy. Meanwhile, European developing economies are predicted to witness a 5.8% average drop. In April, the IMF foresaw Albanian economy shrinking by 5% in 2020.
Public debt is understandably expected to reach the highest levels in recorded history in relation to GDP.
As global financial relief measures have helped in withstanding the effects of the pandemic on the economy, the IMF recommends retaining such measures and expanding them, with the international community providing support to developing countries via concessional financing, debt relief and grants.
On the upside, the IMF currently foresees that the recession will be followed by a 5.4% global economic growth in 2021, with developing economies seeing a quicker recovery (5.9%) than advanced economies (4.8%)