Gita Gopinath, chief economist and director of the Research Department at the International Monetary Fund. Photo: Olivier Douliery/AFP via Getty Images
The coronavirus pandemic will bring about the worst economic downturn since the Great Depression, the International Monetary Fund projected Tuesday in its latest world economic outlook.
Why it matters: The organization expects a recession "far worse" than the 2008 financial crisis. In a revision to its earlier forecast, the IMF said global GDP growth will fall to -3% this year, a drastic downgrade from its forecast of +6.3% in January.
By the numbers: Global GDP will face a cumulative loss of about $9 trillion — larger than the economies of Japan and Germany combined.
- Growth in advanced economies is projected to be -6.1%.
- Emerging markets are projected to have growth rates of -1.0%, and -2.2 percent if China is excluded.
- Income per capita is expected to shrink for over 170 countries.
Zoom in: The United States is projected to experience -5.9% growth, while the eurozone will see -7.5%. Italy, the country in Europe hit the hardest by the pandemic, is projected to experience -9.1% growth.
Yes, but: The IMF projects growth will partially rebound to +5.8% in 2021 if the pandemic fades in the second half of 2020 and if "policy actions taken around the world are effective in preventing widespread firm bankruptcies, extended job losses, and system-wide financial strains," according to the report.
- But it projects economic activity will still remain below what was forecasted for 2021 before the outbreak.
The bottom line: The IMF urged policymakers around the world to keep using lockdown policies to stop the virus from spreading, noting that they're the best way to eventually be able to resume normal economic activities.
- "In this sense, there is no trade-off between saving lives and saving livelihoods," the report states.