The International Monetary Fund (IMF) has warned that the global economic recovery – following the economic shock of the Covid-19 pandemic – could take longer than initially estimated.
The IMF is due to release its forecasts for global growth at the end of the month, and the body has warned that these are likely to reflect a worsening outlook compared to its April forecasts. In that month the IMF had predicted that the global economy would shrink by three percent in 2020, the worst global contraction since the Great Depression of nearly a century ago. A sharp recovery of nearly six percent was predicted for 2021.
However, the IMF’s chief economist, Gita Gopinath, has said that the global economy now seems to be recovering more slowly than initially predicted. Said Gopinath: ‘One has to be quite concerned about the path of recovery.’ She pointed to an increase in bankruptcies and insolvencies and changes in consumer behaviour as red flags for the world economy. She also cited increased geopolitical tensions, particularly between the United States and China, as an additional factor in a slower global recovery.
A number of the world’s major economies are also forecast to see major retractions in GDP for 2020, with the economies of the United Kingdom, Italy, France, and Spain all expected to shrink by as much as 11% this year.
China, where the Covid-19 virus originated, will likely see an economic contraction of nearly three percent.