Global Economy Will Experience A 3 Percent GDP Fall

For some time now, economists have been saying that the COVID-19 pandemic will generate an economic crisis. The question now is how deep this crisis will be. IMF seems to have an answer for this. Yesterday, Kristalina Georgieva, Managing Director of IMF, said that the COVID-19 emergency would generate the worst economic crisis since the 1929 Great Depression. However, the fund today published how deep the crisis will be.

According to the World Economic Outlook published today, the fall will be of 3 percent of the global GDP and IMF expects the Mexican economy will experience a 6.6 fall in its GDP. In comparison, the global economy suffered a 0.6 fall in 2009. Though the IMF warns that the economic fallout is hard to determine since it depends on many factors including the intensity and efficiency of containment efforts, the impact the financial markets will have or the behavioral changes this will have on the population, such as avoiding shopping malls or public transportation.

Though some global leaders and even businessmen have said that saving the economy implies saving lives, IMF warns against the reluctance many have had towards closing the economy. “Necessary measures to reduce contagion and protect lives will take a short-term toll on economic activity but should also be seen as an important investment in long-term human and economic health.” IMF also recommends governments to implement “substantial targeted fiscal, monetary and financial market measures to support affected households and businesses.”

For 2021, IMF expects that the global economy will rebound with a 5.8 percent growth rate and Mexico is expected to experience a 3 percent rebound. However, IMF says that this depends on the pandemic fading in 2H20 and that public policies placed by governments prevent companies’ bankruptcies, extended job losses and system-wide financial strains.