The global economy will shrink by 3pc this year, and few major economies will make up for the lost growth in 2021 as a result of collapsing economic activity in the wake of the Covid-19 pandemic, the IMF said today.
The IMF projected in its World Economic Outlook that global gross domestic product (GDP) will decline by 3pc after experiencing a 2.9pc growth last year.
The global economy is expected to rebound next year, with a growth rate of 5.8pc. But that rebound is likely to be limited to China and emerging economies in Asia, with the US, the EU, the UK, Japan, Canada and most of Latin America expected to experience slower recovery that will leave their economies in 2021 below 2019 levels.
The pandemic-related hit to global supply and demand is the key factor in the economic decline that the IMF says is comparable to the Great Depression of the 1930s. The projected decline in global GDP far exceeds the 0.1pc decline in 2009, in the wake of the financial crisis.
Only three months ago, the IMF was expecting the global economy to grow by 3.3pc in 2020. IMF forecasts are widely used in modeling for key oil demand projections, including those of the IEA.
"This crisis is like no other," IMF director of research Gina Gopinath said. "The output loss associated with this health emergency and related containment measures likely dwarfs the losses that triggered the global financial crisis." Even the current forecast could be scaled down further, Gopinath warned, noting that "there remains considerable uncertainty around the forecast, the pandemic itself, its macroeconomic fallout, and the associated stresses in financial and commodity markets."
China, where the pandemic originated and where the first wide-scale restrictions on travel, industrial activity and trade were implemented, is projected to grow at a 1.2pc rate this year, but its GDP will rise by 9.2pc in 2021, according to the IMF.
India will follow a similar "v-shape" recovery path, with modest growth this year that will rebound to 7.4pc in 2021.
The US economy is expected to shrink by 5.9pc this year, with growth rising to 4.7pc in 2021. The economic contraction in the eurozone is expected to be even sharper, with a projected 7.5pc decline this year. Japan, Canada and the UK will likewise recover slowly from what the IMF terms "the Great Lockdown."
Latin American economies also will be slow to recover from the pandemic-related economic crisis, the IMF projects. Mexico's economy is expected to contract by 6.6pc this year, marking the second consecutive annual economic decline. Brazil's GDP will fall by 5.3pc.
Oil exporters in the Middle East and North America are projected to experience a "v-shape" recovery next year, with the exception of Iran, where economic activity is further constricted by US sanctions. Saudi Arabia's economy is expected to decline by 2.3pc this year but increase by 2.9pc in 2021. The IMF completed its economic modeling for the region before the Opec+ group revived its production cut agreement, so its effects are not factored in.
Russia's economy is projected to decline by 5.5pc this year, with growth returning at 3.5pc in 2021.
The IMF's outlook points to a likely decline in jet fuel and gasoline demand this year in advanced and emerging economies. World trade volumes are expected to decline by 11pc this year but then grow by 8.4pc in 2021.
