The International Monetary Fund released its spring World Economic Outlook on Tuesday as nations around the globe reel from the coronavirus scare that has caused governments to shut down large parts of their national economies in an effort to curb the pandemic.

There was no doubt whatsoever that the IMF had to slash its previous forecast of 3.3% global growth for this year, as lockdowns led to a state of near economic standstill. 

In a sharp revision, the latest report expects the global economy to contract by 3% in the course of 2020, reflecting IMF Managing Director Kristalina Georgieva's earlier warning of a "broad-based global recession."

"We anticipate the worst economic fallout since the Great Depression," she said.

Europe in focus

The report suggested that the 19-member eurozone would crash by a staggering 7.5% in 2020. Britain, which left the EU in January, would see its economy contract by 6.5%.

The IMF concluded that Europe as a whole would most likely see the worst performance of any region in the world.

The report didn't fail to send out a signal of optimism, saying that if COVID-19 was contained in the second half of the year and economies around the globe could begin operating again, 2021 should see a rebound of 5.8%. But that message came with a caveat as the authors acknowledged the difficulty in making an accurate forecast amid a rapidly changing situation.

 

"Much worse growth outcomes are possible and may be even likely, if the pandemic and containment measures last longer," report said, or "if emerging and developing nations are even more severely hit, or if widespread scarring effects emerge due to firm closures and extended unemployment."

Immediate debt relief for some

Prior to the release of its World Economic Outlook, the IMF had pledged immediate debt relief to 25 poorer member countries under its Catastrophe Containment and Relief Trust (CCRT). 

Kristalina Georgieva noted the trust had about $500 million (€458 million) on hand, adding that a first batch of grants had been approved to help coronavirus-hit nations cover their debt servicing obligations for an initial six months.

"This provides grants to the poorest and most vulnerable members and will help them channel more of their scarce financial resources towards vital emergency medical and other relief efforts," the managing director said. 

hg,ap (AFP, Reuters, dpa)