– World Economic Outlook Report illustrates greater-than-anticipated impact of COVID-19 pandemic

THE global growth projections from the International Monetary Fund (IMF) have contracted even further as the COVID-19 pandemic has had a greater-than-anticipated impact on global economies.

According to the World Economic Outlook (WEO) report released on June 24, global growth is projected to be negative 4.9 per cent in 2020, a further 1.9 per cent below the projections given in April.

In January, global growth was projected to rise by 3.3 per cent, however, the adverse effects of the COVID-19 pandemic resulted in the revised projection in April. In the April WEO report, it was highlighted that the global economy was expected to rebound by 2021, and the economy would grow by 5.8 per cent in that year. That projection was based on the assumption that the pandemic would fade in the first half of 2020. However, that is not the case.

“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast,” the June report said, however. Growth is projected to be 5.4 per cent by 2021.

For the Latin America and the Caribbean economy, growth is now expected to contract by 9.4 per cent, a further 4.7 contraction that what was reported in April. In April however, the IMF reported that Guyana was expected to be the only country in the Latin America and Caribbean Region to have a positive outlook for 2020.

In April, Guyana’s economy was projected to grow by 52.8 per cent, a revision to the prior 86 per cent growth projection. That revision came as a result of the less-than-usual global demand for oil due to the COVID-19 pandemic and the oil price war between Russia and Saudia Arabia. The IMF has not yet released figures specifically for Guyana in its new, June report.

The June WEO report dubbed, “A Crisis Like No Other, An Uncertain Recovery”, also stated that the projections also imply a “particularly acute” negative impact of the pandemic on low-income households worldwide. This could significantly raise inequalities, according to the report.

Furthermore, the report noted that pandemic is likely to reverse the progress made on poverty reduction in over the past few decades as more than 90 per cent of emerging market and developing economies projected to register negative per capita income growth in 2020.

These economies are further strained by their lower healthcare capacity, larger informal sectors and tighter borrowing constraints. Therefore, the IMF suggests that strengthening healthcare should remain a priority. Social distancing measures should still continue.

“As the great lockdown begins to ease in several parts of the world, fiscal policies will have to adapt to country circumstances, balancing the need to protect people, stabilise demand, and facilitate recovery,” the IMF said. “Where the pandemic remains acute and stringent lockdowns continue, fiscal policies should accommodate healthcare services to save lives and provide emergency lifelines to protect people.”