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The IMF fears that the crown crisis may cost the world more than NOK 90 billion in loss of economic growth. But next year, growth is expected to return a bit.
CLOSING: The IMF believes that world GDP will decrease by 3 percent this year, assuming the pandemic and measures peak in the second quarter. The image is of an almost empty Time Square in the United States.
ANGELA WEISS / AFP
published:,
The International Monetary Fund (IMF) predicts that the world economy will shrink by three percent in 2020.
It shows a recent edition of World Economic Outlook released on Tuesday afternoon.
Compared to the January report, there is a deterioration of 6.3 percentage points.
“This year’s global economy is very likely to experience its worst recession since the Great Depression and to go by what was seen during the global financial crisis a decade ago,” the IMF wrote in the report, continuing:
“The Great Blockade, as it might be called, is expected to dramatically reduce global growth.”
CRISIS ACTION: The IMF calls the crisis The Great Lockdown, and it has billions of dollars available in crisis loans for vulnerable countries. The image shows the head of the IMF, Kristalina Georgieva.
Samuel Corum / GETTY IMAGES NORTH AMERICA
Significant decrease also in Norway
Overall, for 2020 and 2021, the economic loss associated with falling GDP could amount to around $ 9 billion (NOK 92 billion).
The IMF’s estimates are conditional on both the disease and measures peaking in the second quarter and then reduced in the second half.
In Norway, the IMF expects a total GDP fall of 6.3% in 2020 from 1.2% growth the previous year. Unemployment is expected to rise to 13%.
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emergency measures
The IMF emphasizes that the crisis facing the world must be addressed in two phases, in which both health policy and economic policy will play the leading roles.
From an economic point of view, the IMF believes that the authorities must ensure that the population and companies can meet their needs even when the economy is closed. This must be ensured through specific measures by both the authorities and the central banks.
These are measures that most countries have already started. At home, Norges Bank has lowered interest rates by a total of 1.25 percentage points to 0.25 percent, while at the same time various loan schemes have been established for banks.
Furthermore, the authorities have put forward a wide range of crisis measures to ensure that the economy improves. In total, the crisis measures presented so far are expected to receive a price of over NOK 200 billion.
Looking at the United States, authorities have unveiled a crisis package of more than $ 2 billion. This included cash payments to low-income families and the middle class.
Even the IMF makes $ 1 billion available for crisis loans to the world’s most vulnerable countries.
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Severe reverses in Italy
The IMF report also shows which countries are expected to have the greatest financial impact by 2020. Of the individual countries, Italy is the worst. Here, the IMF expects a financial decline of 9.1 percent.
The Mediterranean country has been particularly affected by the crown crisis, and was the European country that first experienced a sharp increase in the number of cases of infection.
For Spain, an economic decline of 8.0 percent is expected this year. For both countries, that represents a deterioration of 9.6 percentage points compared to the situation that the IMF had in January.
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The United States, which became the world’s deadliest country in the crown crisis this weekend, is expected to experience an economic decline of 5.9 percent this year. For the euro area as a whole, the IMF forecasts a drop of 7.5 percent.
In so-called emerging markets and developing countries, the IMF expects a total economic decline of 1.0 percent this year. It is particularly drawn by European and Latin American countries that fall into this category.
Large countries like China and India are expected to see economic growth of 1.2 and 1.9 percent respectively this year. However, it is much weaker than the January estimates.
Looking to the coming year
As for 2021, the IMF sees growth of 5.8 percent in the global economy, but that’s only a partial decline in the pre-virus era. World GDP will continue to be below previously forecast levels in 2021.
“Much worse growth results are possible and possibly also probable,” the IMF continues, stressing that this will happen if pandemic and infection control measures will last longer than the money fund anticipates.
IMF: The Great Blockade: The Worst Economic Recession Since The Great Depression
