'Crisis Like No Other' To Wipe 5pc Off World Economy

The global coronavirus pandemic has sparked an economic "crisis like no other," sending world GDP plunging 4.9 percent this year and wiping out US$12 trillion over two years, the IMF said on Wednesday.

Worldwide business shutdowns destroyed hundreds of millions of jobs, and major economies in Europe face double-digit collapses in the worst crisis since the Great Depression nearly a century ago.

The prospects for recovery post-pandemic – like the forecasts themselves – are steeped in "pervasive uncertainty" given the unpredictable path of the virus, the IMF said in its updated World Economic Outlook.

"The Covid-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast," the fund warned.

While businesses are reopening in many countries and China has seen a bigger rebound in activity than expected, a second wave of viral infections threatens the outlook, the report said.

World GDP is expected to rebound by just 5.4 percent in 2021, and only if all goes well, the IMF warned.

IMF chief economist Gita Gopinath said under current forecasts, the crisis will destroy US$12 trillion over two years, and cautioned, "we are not out of the woods."

She warned governments against withdrawing the stimulus too quickly.

"This is a crisis that requires all hands on deck," she told reporters. While governments and central banks have gone to extraordinary lengths so far to provide support for workers and businesses, "more will be needed."

Hanging over the predictions are the bills for massive government stimulus plans, fueled by extremely low interest rates and likely preventing the recession from turning into another depression, even as they created huge and ever-increasing debt levels.

The damage is nonetheless stunning, and more widespread than any downturn in recent decades.

China will eke out growth of one percent this year, the only positive figure on the long list of key economies the IMF tracks.

The United States will shrink eight percent and Germany slightly less, while France, Italy, Spain and Britain will suffer double-digit contractions. Japan makes out a bit better with a drop of just 5.8 percent, according to the forecasts. (AFP)