The global economy will suffer its worst year since the Great Depression in the 1930s due to the coronavirus and lockdowns that have shut down much of the world, the International Monetary Fund (IMF) said in its latest forecast.
In its biannual World Economic Outlook released on April 14, the global lender projected the world economy will contract by 3.1 percent this year before returning in 2021 to 5.8 percent growth.
"This makes the great lockdown the worst recession since the Great Depression and far worse than the global financial crisis" in 2009, said Gita Gopinath, the IMF chief economist.
The estimate represents a sharp downward swing of nearly 6 percent from the IMF’s previous global growth estimate of 3.3 percent issued earlier this year before the coronavirus spread across the globe.
The dire economic projections could be deeper, the IMF warned, if lockdowns persist over several quarters and there are renewed outbreaks later this year or next.
"Much worse growth outcomes are possible and maybe even likely," the report cautioned, adding that there were many unknowns about how the pandemic and its economic fallout would play out.
Lockdowns, business shutdowns, social distancing, and travel restrictions have plunged the world economy into standstill, disrupting trade and leading to millions of job losses. Worldwide trade will plummet 11 percent this year, according to the IMF, and then grow 8.4 percent in 2021.
“The world has been put in a great lockdown,’’ Gopinath told reporters. “This is a crisis like no other.”
In the outlook, the U.S. economy this year is forecast to shrink 5.9 percent, while the 19 EU countries that share the euro currency are projected to retreat 7.5 percent.
Elsewhere, Russia’s economy is forecast to slump 5.5 percent compared to modest growth of 1.3 percent last year, in part driven by low oil and commodity prices. It is then expected to rebound to 3.5 percent in 2021. Meanwhile, neighboring Belarus is projected to see its economy shrink by 6 percent, compared to 1.2 percent growth last year.
In Ukraine, which has registered modest growth in recent years since the economy dived more than 16 percent in 2014-15 due to the conflict in the east of the country, the economy is expected to plummet 7.7 percent in 2020.
Countries in southeastern Europe face a range of negative growth estimates, from a slump of 3 percent in Serbia to a 9 percent drop in Montenegro.
In the Middle East and Central Asia, the IMF forecasts growth will slip 2.8 percent compared to a modest gain of 1.2 percent last year. It is then projected to increase by 4 percent in 2021.
Iran, where a combination of sanctions and coronavirus have pummeled the second largest economy in the Middle East, growth is forecast to shrink 6 percent in 2020 for its third contraction in a row. In 2018 and 2019, it shrank by 3.6 percent and 7.6 percent, respectively.
In Central Asia, Uzbekistan, Turkmenistan, and Tajikistan are some of the few countries in the world that will eke out modest growth of between 1 and 1.8 percent this year, the IMF said.
However, neighboring Kazakhstan and Kyrgyzstan will shed 2.5 and 4 percent, respectively. That compares to 4.5 percent growth in each country last year.
Meanwhile, the economies of Afghanistan and Pakistan this year will fall 3 and 1.5 percent, respectively, compared to growth near 3 percent last year.
In the South Caucasus, the IMF forecasts Armenia’s economy will drop 1.5 percent this year after booming 7.6 percent in 2019, while energy-rich Azerbaijan’s growth will fall to negative 2.2 percent compared to a gain of 2.3 percent last year.
After experiencing solid growth of around 5 percent over the past three years, Georgia’s economy will slump 4 percent in 2020, the IMF said.