Coronavirus leads the world into the worst crisis in 100 years: forecast of the chief economist of the IMF

Coronavirus plunges the world into the deepest economic crisis since the great depression between the two world wars, writes the BBC. He quickly and easily will Eclipse the financial crisis of a decade ago, and in the best case, the planet will recover only next year, will miss 9 trillion dollars, the IMF warned.

Коронавирус ведет мир к худшему кризису за 100 лет: прогноз главного экономиста МВФ

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For the first time in the modern history of the international monetary Fund has sharply revised forecasts for such a short time: back in the fall he expected the world economic growth in 2020 by more than three percent, and now I am sure that this will not increase but decline.

“The current crisis has a truly global scale, no country shall escape it, — said the chief economist of the IMF Gita Gopinath. For the first time since the great depression in the recession will be both developed and emerging economies”.

She presented on Tuesday, the forecast of consequences of a new crisis, which already has a name: the Great quarantine (Great Lockdown). The previous is called the great recession, although in 2009 the decline of world GDP has not reached one percent.

The IMF forecast is based on optimistic scenario, the rapid conclusion of a global pandemic Covid-19. If the peak of infections in most countries will be completed by the summer, and in the second half of the virus will retreat, and the quarantine will gradually be removed, then the economy of developed countries will shrink by 6% this year, while developing — 1%.

During the great depression almost a hundred years ago, developed countries have lost 16% of the national product, but in General, global GDP then fell by about 10%. To such this time will not come, and next year the global economy will grow by 5.8 percent, hoped the IMF.

Will have to spend money all

However, this will not be enough to compensate for all the losses, and in 2021 the money in the world will be less than expected in recent doveroso the past, and debt — more.

This will increase the pressure on the budgets of all countries, already battered by the medical Abraham. Tax revenues will decline, because many citizens and companies go bankrupt, economic activity will end, and GDP will be on average 5% less. That is, for two years the planet will miss 9 trillion dollars — so much for the year and does not produce even Japan and Germany combined.

In a normal situation, not to raise taxes and not harm the recovery in business activity, the state cut spending. But now is not the case, warned the IMF chief economist.

The authorities of all countries will have to go on an unprecedented spending: first, to mitigate the crisis and then to recover.

“The anti-crisis measures at national and international levels must be massive and immediate, and policies need to be quickly set based on the most recent data,” said Gita Gopinath and invited politicians and bureaucrats to learn from the courage and sacrifice of doctors, find themselves on the front lines of this crisis.

The state can not turn off until the completion of the deterrent phase of coronaries to the inevitable collapse of investment and employment has left fewer scars on the body of the world economy, said the chief economist of the IMF.

But all the predictions will turn to fantasy, if the virus does not subscribe to the optimistic scenario of a pandemic and will not back down for the summer.

The quarantine will have to renew, depressed business and social activity will lead to a financial crisis, global value chains will continue to crumble, tourists will not go anywhere, planes will not fly.

In this case, the fall of the world economy this year will be twice as deep as predicted on Tuesday. And if the pandemic will continue in 2021, no recovery, even with the loss of speech will be gone.

The IMF believes that the world will remain in recession and will miss 8% of GDP compared to the baseline forecast. That is, instead of 9 trillion dollars of prior medical bills the world economy pandemic Covid-19 would cost tens of trillions.

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