IMF revises down 2020 global economy forecast to contraction of 4.9 pct
UNTV News • June 25, 2020 • 378
The International Monetary Fund (IMF) on Wednesday revised down its forecast for the global economy amid the mounting COVID-19 fallout, projecting a 4.9-percent contraction in 2020.
The latest projection is 1.9 percentage points below the World Economic Outlook (WEO) forecast released in April, indicating a grimmer economic outlook as the pandemic continues to ripple across the globe.
“Compared to our April World Economic Outlook forecast, we are now projecting a deeper recession in 2020 and a slower recovery in 2021,” IMF Chief Economist Gita Gopinath said in a virtual news conference, noting that these projections imply a cumulative loss to the global economy over two years of over 12 trillion U.S. dollars from the crisis.
“The downgrade from April reflects worse than anticipated outcomes in the first half of this year, an expectation of more persistent social distancing into the second half of this year, and damage to supply potential,” Gopinath told reporters.
Advanced economies are projected to contract 8 percent this year, 1.9 percentage points lower than the forecast in the April WEO.
The U.S. economy is expected to shrink 8 percent, the Euro Area is on track to contract 10.2 percent, and the Japanese economy could decline 5.8 percent.
Emerging markets and developing economies, meanwhile, are projected to shrink by 3 percent this year, 2 percentage points below the April WEO forecast, according to the updated report.
Brazil and Mexico are projected to contract by 9.1 and 10.5 percent respectively, while India’s economy could see a contraction of 4.5 percent. China is expected to grow by 1 percent, the only major economy that could see growth this year.
The latest report also showed that global growth is projected at 5.4 percent in 2021, which would leave 2021 gross domestic product (GDP) some 6.5 percentage points lower than in the pre-COVID-19 projections made in January 2020.
Warning that the crisis will also generate medium-term challenges, Gopinath said that public debt this year is projected to reach the highest level in recorded history in relation to GDP, in both advanced and emerging markets and developing economies.
“Countries will need sound fiscal frameworks for medium-term consolidation, through cutting back on wasteful spending, widening the tax base, minimizing tax avoidance, and greater progressivity in taxation in some countries,” she said.
The IMF chief economist noted that a high degree of uncertainty surrounds this forecast, with both upside and downside risks to the outlook. On the upside, better news on vaccines and treatments, as well as additional policy support, could lead to a quicker resumption of economic activity, she said.
On the downside, further waves of infections could reverse increased mobility and spending, and rapidly tighten financial conditions, triggering debt distress, she said, adding that geopolitical and trade tensions could damage fragile global relationships at a time when trade is projected to collapse by around 12 percent.
Noting that global cooperation is more than ever “so important” when dealing with a truly global crisis, Gopinath said that every effort should be made to resolve trade and technology tensions while improving the multilateral rules-based trading system. (Reuters)
Beijing, China – International organizations including the International Monetary Fund and the World Bank warned Thursday that the world is facing a synchronized economic slowdown stemming from factors such as trade tensions between China and the United States and resulting uncertainties.
At a press conference following Thursday’s 1+6 roundtable meeting in Beijing, which involved Chinese authorities and various international economic institutions, new IMF Managing Director Kristalina Georgieva said the estimated losses for the global economy due to the China-US trade war will amount to $700 billion by 2020, 0.8 percent of the world’s GDP.
“We should move from trade truce to trade peace,” she urged.
The Bulgarian said that global growth is projected at only 3 percent in 2019 — the slowest in a decade — and recalled that growth of 90 percent of the world’s GDP has slowed in the past year in contrast to two years ago when 75 percent of the global economy experienced an upswing.
According to Georgieva, the current situation — which could worsen depending on the outcome of the United Kingdom’s exit from the European Union — increases financial vulnerability and poses long-term challenges such as income inequality, demographic and regional disparities.
The IMF chief warned that these issues “will continue to weigh on growth unless they are quickly addressed.”
World Bank President David Malpass spoke in similar terms and called for efforts to resolve trade problems between Beijing and Washington to “avert a sharper slowdown.”
Also present at the meeting was Chinese Prime Minister Li Keqiang as well as representatives from the World Trade Organization, the International Labour Organization, the Organization for Economic Cooperation and Development and the Financial Stability Board.
The joint statement issued by all these parties at the end of the meeting reiterates support for multilateralism and international cooperation as the only method for solving problems arising between countries.
It also underlines the need to strengthen the resilience of the financial system and to fortify trading systems. EFE-EPA
Christine Lagarde on Tuesday submitted her formal resignation as the Managing Director of the International Monetary Fund (IMF), with her eight-year tenure officially coming to an end on September 12.
Following Lagarde’s announcement, the IMF Executive Board said on Tuesday that it will promptly initiate the process of selecting its next managing director.
Lagarde’s resignation came after she was nominated for the presidency of the European Central Bank (ECB) earlier this month, as part of the European Union (EU) leaders’ agreement on the future leadership of top EU institutions.
She then decided to temporarily step down from the IMF leadership during the nomination period.
Lagarde, a 63-year-old French national, would become the first woman to lead the ECB. She is set to replace Mario Draghi, whose eight-year term ends on October 31.
On July 5, 2011, Lagarde became the 11th managing director of the IMF, and was the first woman to hold this position. She was later elected to serve a second five-year term in her post, which started in July 2016.
Prior to joining the IMF, Lagarde served as France’s finance minister from 2007 to 2011. (REUTERS)
The Economic Performance of the Philippines continues to be strong with robust growth over the recent years.
This is based on the findings of the International Monetary Fund (IMF) led Luis E. Breuer, head of the 2017 Article Mission to the Philippines.
Mr. Breuer, who visited the country from July 26 until August 9, said the Philippine’s economic performance is characterized by 6.9% growth in 2016.
Unemployment rate has fallen while investments have grown.
Growth of the economy decreased a little in 6.4% in the first quarter due to slow public spending and strong base effects following the election last year.
Meanwhile, he clarified that conflict in Mindanao has not affected the flow of investments in the Philippines.
“We have no evidence that confidence or sentiment in the Philippines which is very strong, regional and global standards, both the private sector and the public sector have very ambitious plans to expand, we have no evidence that the confidence has been weakened because of any regional security events,” Breuer said.
He added that they support the plan of the Duterte administration to spend more on infrastructure.
He also recommended the passage of the tax reform package that will provide bigger revenue collection for the government.
“It will generate resources for the authorities to expand priority investments and social services and infrastructure, it will provide insurance against volatile international financial conditions,” Breuer said.
Passing the Rightsizing Bill can also help in improving the spending efficiency and quality.
Breuer however clarified that this is just part of the preliminary findings of his team after they met with the governor of the Bangko Sentral ng Pilipinas, some local government officials and the private sector. He said based on this he will draft a report to be submitted to the executive board of IMF for approval. – Joyce Balancio | UNTV News and Rescue
UNTV is a major TV broadcast network with 24-hour programming. An Ultra High Frequency station with strong brand content that appeal to everyone, UNTV is one of the most trusted and successful Philippine networks that guarantees wholesome and quality viewing experience.