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- After the impact of the crown, the economy is recovering faster than expected in some countries.
- Therefore, the International Monetary Fund (IMF) has revised its outlook for the world economy slightly upwards.
- Even so, the economy remains in deep recession.
The situation is bad, but not as precarious as was feared in spring. This is how the monetary fund’s forecast can be summarized, which has been slightly revised upwards.
Chief economist Gita Gopinath now sees world economic output as “only” contracting 4.4 percent this year. Especially industrialized countries like the United States, but also China, recovered faster than expected at the beginning of the corona pandemic.
Bad news for the poorest countries
Aside from China, the outlook for some other developing and emerging countries, according to the fund’s assessment, has even deteriorated again. This is because the pandemic is spreading faster and faster there.
The virus could cause lasting damage: All the progress made in fighting poverty over the past few decades would be undone, according to the IMF. This is likely to increase social inequality.
As long as the pandemic continues, there will be no return to normal daily economic life, Gopinath said.
Keystone
After all, it looks a little less bleak in financial markets. The dreaded catastrophe has so far not materialized, said IMF chief economist Gopinath. The reason for this is also the massive support of the economy by central banks and governments. The chief economist emphasized: The world economy is still in a deep and unprecedented recession, much deeper than after the 2008 financial crisis.
Prospects remain uncertain. The IMF expects the world economy to recover next year, and average growth of 5.2 percent. But he also warns that recovery will be slow, uneven, unsafe and prone to relapse. In other words: almost as unpredictable as the coronavirus itself.
Horrible debt
As long as the pandemic continues, there will be no return to normal daily economic life. Therefore, to avoid further setbacks, governments should not withdraw their financial aid too quickly, demands the chief economist.
But probably not all countries can. And even if they do, the debt of many countries will rise to unprecedented levels as a result of the support measures. A heavy burden for future generations, which should not facilitate the planned ecological restructuring of the economy.
