IMF’s World Economic Outlook is Out and is Not Pretty

In light of the upcoming Spring Meetings of the World Economic Forum and the International Monetary Fund (IMF), the latter presented its latest edition of the World Economic Outlook, where it laid out its expectations for the world’s economic perspectives after the COVID-19 pandemic. Also, Fitch Ratings downgraded Mexico’s rating from BBB to BBB-.

In case you missed it, this is what made the headlines over the week!

• Ahead of the presentation of the April 2020 edition of the World Economic Outlook, Kristalina Georgieva, Managing Director of IMF, said that as a result of the COVID-19 emergency, the world would experience the worst economic recession since the 1929 Great Depression. In the January edition of the World Economic Outlook, IMF had expected around 160 countries to experience growth. However, in this new edition, IMF expects around 170 countries will experience economic contraction.
• In fact, IMF has concluded that for 2020, the global economy will experience a 3 percent fall in GDP, a steeper fall than in 2009, where the economy experienced a 0.6 percent fall. Should the pandemic be contained in the second half of 2020, IMF expects the world economy will rebound in 2021 with 5.8 percent growth.
• Mexico is expected to experience a 6.6 percent fall in its GDP and a 3 percent recovery for 2021. However, recovery depends on Mexico’s ability to commit resources not only for the health sector but for other, as well, and making sure that companies can survive the current pandemic.
• Though members of the private sector have urged the president to take on additional debt while he insists that he will not, IMF expects Mexico’s debt will grow around 8 points of the GDP by the end 2020 and the government deficit will grow from 2.3 to 4.2 percent. The increase in debt would be the result of the 6.6 percent fall in GDP anticipated by IMF and the depreciation of the exchange rate.
• Also, Fitch Ratings reduced Mexico’s investment rate from BBB to BBB-, which puts Mexico just one step above the investment grade.