(RTTNews) – Global economy is set to contract less severely than feared initially, due to better-than-expected outcomes in the main economies in the second quarter despite the lockdowns to battle the coronavirus pandemic, but the outlook remains clouded with uncertainty, especially for the emerging markets, the International Monetary Fund said Tuesday.
In its latest World Economic Outlook, the lender forecast 4.4 percent contraction for the world economy this year, which was less severe than the 5.2 percent decline seen in June.
“This upgrade owes to somewhat less dire outcomes in the second quarter, as well as signs of a stronger recovery in the third quarter, offset partly by downgrades in some emerging and developing economies,” IMF Chief Economist Gita Gopinath said.
The global economy is expected to rebound with 5.2 percent growth next year, which was less than the 5.4 percent expansion seen earlier.
Economic output is forecast to be below 2019 levels even next year in both advanced economies and emerging markets. However in China, output is expected to exceed its last year’s level.
Advanced economies are expected to shrink 5.8 percent this year, which is much less than the June prediction of 8.1 percent contraction. They are forecast to grow 3.9 percent next year.
Emerging market and developing countries, excluding China, are expected to have a contraction of 5.7 percent versus 5 percent seen in June. They are expected to grow 5 percent next year.
China is expected to register growth of 1.9 percent this year, which is better than the 1 percent expansion forecast in June. Next year, growth is expected to zoom to 8.2 percent.
India is set to witness the worst contraction this year, shrinking 10.3 percent due to a collapse in consumption and investment. The forecast was sharply revised from a 4.5 percent decline