IMF revises 2020 world economic growth forecast to -4.4%

Charles Abuede

• Warns of slower 2021 as global economy climbs to pre-pandemic levels
• Nigeria’s output to grow by 1.7% in 2020 and -4.3% in 2020

The International Monetary Fund (IMF), a multilateral financial institution, has upgraded its world economic forecast to -4.4 per cent for 2020; this forecast signals a less severe contraction than forecast in the June 2020 World Economic Outlook (WEO) Update, and warns of a slower year 2021 as the global economy’s long ascent back to pre-pandemic levels of economic activities remain prone to setbacks.

The multilateral lender in its October economic outlook which is titled “A long and difficult ascent,” revealed that “following the contraction in 2020 and recovery in 2021, the level of global GDP in 2021 is expected to be a modest 0.6 per cent above that of 2019. The growth projections imply wide negative output gaps and elevated unemployment rates this year and in 2021 across both advanced and emerging market economies in the near term.”

This revision comes a few months after the release of the June 2020 World Economic Outlook (WEO) Update which offered a foretaste of how difficult the rejuvenation of economic activity will be as the pandemic surges.

Consequently, many economies tentatively reopened from the Great Lockdown during May and June this year and the global economy started to climb from the depths to which it had plunged in April. But with the pandemic spreading and accelerating in places, many countries sluggishly reopened, and some are reinstating partial shutdowns. Meanwhile, the global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks.

A further unpacking of the latest growth projections by the international monetary body, shows that it is proposing that advanced economies will witness a -5.8 per cent growth in 2020 and slowly experience a 3.9 per cent growth in output. From the foregoing, the United States (-4.3%), Euro Area (-8.3%), United Kingdom (-9.8) and other advanced economies (-3.8) have been projected to see a rise in real GDP to its pre-pandemic levels in 2021 by 3.1, 5.2, 5.9 and 3.6 per cent respectively.

Similarly, the emerging markets and developing economies are projected by the IMF to grow at -3.3 per cent this year and also record 6.0 per cent growth in output. Furthermore, 2020 and (2021) projections for emerging and developing markets within the  Asia region stands at -1.7 per cent (8.0%); Europe -4.6 per cent (3.9%); Latin America and the Caribbean -8.1 per cent (3.6%); the Middle East and Central Asia -4.1 per cent (3.0) while low-income developing countries will record -1.2 per cent and 4.9 per cent growth in 2020.

Meanwhile, across the sub-Saharan African region, the multilateral lender forecasts that the real GDP annual percentage change will be -3.0 per cent for 2020 while the year 2021 will see an improvement in the region’s output by 3.1 per cent. Nigeria, Africa’s largest economy is projected to record negative GDP growth in 2020 at -4.3 per cent while an uptick in its growth will see it post 1.7 per cent, while South Africa will record -8.0 per cent growth in 2020 and 3.0 per cent growth in 2021.