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IMF Says Global Economic Contraction To Be Less Severe Than Feared Earlier

IMF Says Global Economic Contraction To Be Less Severe Than Feared Earlier

(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

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IMF Projects Less Severe Global Economic Decline for 2020, Slower Growth for 2021 | Best Countries

IMF Projects Less Severe Global Economic Decline for 2020, Slower Growth for 2021 | Best Countries

The International Monetary Fund announced on Tuesday new economic projections that mix both slightly better news for the short term and not-so-good news for the long term, as the coronavirus pandemic continues to hinder global growth.

The organization’s latest World Economic Outlook projects a global decline of 4.4% in 2020 – painting a rosier picture compared to its last update in June, when a 4.9% contraction was projected. The improved forecast reflects both better-than-expected second quarters – mostly for advanced economies – and indicators of strong recovery in the third quarter, according to the report.

A return to growth among advanced economies and China helped drive the revisions, the report notes. Chinese officials said on Tuesday that the country’s growth in exports accelerated in September, buoyed by a global demand for masks and medical supplies.

But the IMF also again downgraded its global outlook for 2021, projecting growth of just 5.2%. The organization in June projected growth of 5.4%, which represented a decline of 0.4% from its previous update in April. The continued downgrades represent the expectation that social distancing will continue into next year, according to the report. The current projections would leave gross domestic product in 2021 about 6.7 percentage points lower than the IMF’s pre-pandemic projections from January, and the level of global GDP next year is now expected to be a “modest” 0.6% above that of 2019.

The IMF also cautions that because of the nature of the pandemic, the outlook of the global economy is hard to put a finger on. The possibility of worse outcomes than expected “remains sizable.”

“The uncertainty surrounding the baseline projection is unusually large,” the report reads. “The forecast rests on public health and economic factors that are inherently difficult to predict.” That uncertainty also comes as the

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