The “Great Lockdown”, as the International Monetary Fund names it, will trigger the worst economic downturn since the Great Depression in 1929.
In many countries, the health crisis linked to the Covid-19 outbreak interacts with a financial crisis, and a collapse in commodity prices. Under the assumption that the pandemic and required containment peaks in the second quarter for most countries in the world, and recedes in the second half of this year, the IMF projects the global economy to fall to -3 percent in 2020, far worse than the Global Financial Crisis in 2009.
However, assuming the pandemic fades in the second half of 2020 and that policy actions taken around the world are effective in preventing widespread firm bankruptcies, extended job losses, and system-wide financial strains, the international organisation projects global growth in 2021 to rebound to 5.8 percent.
This is a truly global crisis as no country is spared. Emerging market and developing economies with normal growth levels well above advanced economies are also projected to have negative growth rates I 2020 (-1.0 percent or -2.2 percent if China is excluded). Income per capita is projected to shrink for over 170 countries. Both advanced economies and emerging market and developing economies are expected to partially recover in 2021.
Considering one cannot exclude things to turn even worst, the IMF says that in the case the pandemic would not recede in the second half of this year, global GDP would fall even further: an additional 3 percent in 2020 if the pandemic is more protracted this year, while, if the pandemic continues into 2021, it may fall next year by an additional 8 percent compared to the baseline scenario.