Global economy, which has been hit hard by the coronavirus pandemic, may not fully recover even by the end of 2021, according to a chief economist at the International Monetary Fund (IMF).
This week, the Fund downgraded its forecasts for the global economy to shrink by 3 percent in 2020 before growing 5.8 percent by 2021 – a rebound that IMF’s Gita Gopinath described as a “partial recovery.”
“We have a recovery projected for 2021 of 5.8 percent growth, but that is a partial recovery,” she told CNBC on Friday.
“So even by the end of 2021, we’re expecting level of economic activity to be below what we had projected before the virus,” Gopinath said.
The fast-spreading virus, which has contracted more than 2 million people globally, has driven worldwide governments to shut schools and businesses — bringing much of the world’s economic activity to a halt, she added.
However, Gopinath descried the response made by governments and central banks around the world to help businesses and citizens survive the crisis as “aggressive” and “rapid.”
“I think if you compare that to the global financial crisis … the response has been just that much speedier and the scale of it has been that much bigger,” the IMF official said, noting that economies across the globe have unveiled around $8 trillion worth of fiscal stimulus.
But Gopinath said the amount of such stimulus is not “equally distributed” across economies, with nearly $7 trillion coming from G-20 countries.
“The concern we have is more about developing and emerging economies that have less of a fiscal space, have to deal with external account problems, and I think they’re in a tougher spot,” she added.
