International Monetary Fund revises up 2020 global economy forecast to contraction of 4.4 pct

Gita Gopinath Economic Counsellor and Director of the Research Department at the International Monetary Fund speaks

"This upgrade owes to somewhat less dire outcomes in the second quarter, as well as signs of a stronger recovery in the third quarter, offset partly by downgrades in some emerging and developing economies", IMF Chief Economist Gita Gopinath said at a virtual press briefing during the annual meetings of the World Bank Group and the IMF.

The Fund disclosed this on Wednesday in its fiscal monitor policies for the recovery report stressing that there were countries often low-income developing countries, many in sub-Saharan Africa with no access to worldwide financial markets.

In its World Economic Outlook released on Tuesday, the International Monetary Fund forecast a 2020 global contraction of 4.4 percent. Its economy is expected to expand 1.9 percent, an upward revision of 0.9 points.

Egypt's general government's overall balance, as an emerging market and middle-income country, to GDP ratio is projected to decline -7.5 percent in 2020, -8.1 percent in 2021, -5.2 percent in 2022.

According to the International Monetary Fund, "most economies will experience lasting damage to supply potential, reflecting scars from the deep recession this year".

The IMF graph projects that the per capita GDP of both India and Bangladesh would be at United States dollars 1,888 for 2020.

China, where the virus originated, has recovered faster and will see growth of 1.9 percent this year, accelerating to 8.2 percent next year, according to the report.

"The virus is resurging with localised lockdowns being reinstituted", Gopinath said. "Now, if this worsens and prospects for treatments and vaccines deteriorate, the toll on economic activity would be severe and likely amplified by severe financial market turmoil". It said that the world is at risk of significantly lowered investment, trade and job numbers.


The panel also flagged that "international cooperation" would be needed to fast-track research, development, manufacturing and distribution of Covid-19 vaccines.

"Now, we estimate that if medical solutions can be made available faster and more widely relative to our current baseline, it could lead to cumulative increase in global income of nearly 9 trillion dollars by end-2025, benefitting all economies and reducing divergence".

The result "would have been much weaker if it weren't for sizable, swift and unprecedented" response from governments and central banks, amounting to US$12 trillion, she said, again warning of the dangers of removing support too quickly.

"This, in turn, can help narrow the income gap between poorer and richer nations".

Second, Gopinath urged policymakers - to the extent possible - to aggressively focus on limiting persistent economic damage from the crisis.

"The report reflects IMF's confidence in the performance of the Egyptian economy, in a new testimony confirming the insightful vision of President Abdel Fattah El-Sisi, who adopted an ambitious national program for economic reform during the past years in a successful Egyptian experiment that was appreciated by the world", he noted.

Additional social assistance, especially aid that supports the poor directly and cushions the recession, is critical to have a modest impact on the poor, as the report expected an increase in poverty from 80 million to 90 million people.

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