Pandemic: Worst Case Still Possible For Global Economy, IMF Says

WASHINGTON | The International Monetary Fund (IMF) is forecasting a 4.4% recession this year, but the great uncertainty surrounding the COVID-19 pandemic has led the institution to consider a worst-case scenario.

• Read also: All developments in the COVID-19 pandemic

In its latest report on the global outlook released Tuesday, economists at the institution hypothesize that the virus is difficult to control.

They further assume that in 2021, “progress on all fronts in the fight against the virus turns out to be slower than expected (…) including progress in vaccines, treatments and adherence to guidelines. social distancing to contain the spread of the virus ”.

This then leads to a deterioration of activity in economic sectors where contact is essential, such as catering, with possible repercussions on other parts of the economy.

As a result, compared to the baseline scenario, the global recession would be worsened. In 2021, growth would only be around 2.2% against 5.2%, estimated in the baseline scenario.

Conversely, in an optimistic scenario, the fight against Covid-19 is more effective than expected, presumes the IMF.

Advances in treatments are quickly starting to reduce the death rate; fear decreases among populations and confidence returns.

In addition, “an early and substantial acceleration of investments in vaccine production capacities and cooperative arrangements in the global supply chain lead to early and widespread availability of vaccines,” the Fund economists continue.

All of this would result in increased confidence in the efficacy and safety of vaccines, leading to generalized vaccinations.

These advances would then allow the activity of economic sectors requiring a lot of contacts – hotels, restaurants, tourism, leisure – to rebound more quickly than expected in the reference scenario.

In this best-case scenario, global growth accelerates gradually, with GDP rising about 0.5 percentage points higher in 2021, or 5.7%.