The global economy will shrink by 3 per cent in 2020, marking the worst recession since the Great Depression, the International Monetary Fund (IMF) has predicted.
In its half-yearly forecast, the IMF said the “Great Lockdown” caused by the coronavirus pandemic would trigger an economic crisis “like no other”. Gita Gopinath, the IMF’s chief economist, said the crisis could knock $9 trillion (£7.2 trillion) off global GDP over the next two years.
Rich western economies would be hardest hit, the IMF said. The UK economy will shrink by 6.5 per cent in 2020, compared with the IMF’s previous forecast of 1.4 per cent growth. The estimated contraction is less severe than one modelled by the Office for Budget Responsibility earlier today (see 12:37 on this blog), which predicted a 35 per cent contraction in the second quarter alone and a 13 per cent total contraction for the year.
A 6.5 per cent drop would be significantly bigger than the 4.2 per cent contraction after the 2008 financial crisis, and would mark the biggest annual fall since 1921.