Graphic shows IMF forecasts for selected countries.
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BUSINESS

IMF economic forecast

By Duncan Mil

October 14, 2020 - The global economy is climbing out from the depths caused by the coronavirus pandemic, with global growth forecast to rise to 5.2 per cent in 2021, according to the International Monetary Fund (IMF).

The IMF says in its October World Economic Outlook that the global economy is still in deep recession. The latest projection is a little lower than in the June 2020 global GDP growth forecast of 5.4 per cent.

Global GDP will contract by -4.4 per cent in 2020, a slightly less severe contraction than the -4.9 per cent forecast in June.

But with the Covid pandemic continuing to spread, many countries have slowed reopening, and some are reinstating partial lockdowns to protect populations.

Recovery in China has been faster than expected, with positive growth of 1.9 per cent this year, jumping to 8.2 per cent in 2021.

Spain, Italy and India will shrink by -12.8 per cent, -10.6 per cent, and -10.3 per cent respectively this year. The three nations are forecast to expand by a positive 7.2 per cent, 5.2 per cent and 8.8 per cent in 2021.

The outcome would have been weaker, the IMF says, had it not been for the sizable response from governments and central banks that maintained household incomes, protected cash flow for firms and supported lending.

After the rebound in 2021, the IMF projects global growth to gradually slow to about 3.5 per cent into the medium term.

The pandemic will reverse progress made since the 1990s in reducing global poverty and will increase inequality. As many as 434 million people could fall below the $1.90 a day income threshold of extreme deprivation this year.

PUBLISHED: 14/10/2020; STORY: Graphic News
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