April 9, 2020-Despite fiscal stimulus of $8 trillion by governments around the world, the global economy may turn “sharply negative” this year due to the COVID-19 pandemic, according to the International Monetary Fund. Meanwhile, experts predict massive declines in global trade and employment.
“Today we are confronted with a crisis like no other,” IMF Managing Director Kristalina Georgieva said on Wednesday. “Covid-19 has disrupted our social and economic order at lightning speed and on a scale that we have not seen in living memory.”
The outlook is bleak for both advanced and developing economies. The IMF projects negative per capita income growth in over 170 countries this year and only a partial recovery under baseline assumptions for 2021.
Georgieva emphasized that 2020 will be “exceptionally difficult” worldwide. Emerging economies and low-income countries across Africa, Asia, and Latin American are especially high risk, she said, due to their weak health systems, high debt burdens and limited tools to deal with economic shocks.
Double-Digit Declines in Global Trade
As the global economy braces for the impact of the pandemic, trade in goods among nations could falls between 13 and 32 percent, depending on policy responses, according to the World Trade Organization.
The WTO says nearly all regions are likely to suffer double-digit declines. Sectors with complex value chains, such as electronics and the automotive industry, might suffer the most.
In remarks made April 8, WTO Director-General Roberto Azevêdo called on leaders around the world to work together on fiscal, monetary and trade policies meant to help the economy bounce back from the inevitable COVID-19 crisis.
‘Massive’ Job Losses
Labor markets are already undergoing massive layoffs with more losses expected. Specifically, the pandemic and full and partial lockdown measures meant to contain it could wipe out as much as 6.7 percent of working hours globally – equivalent to 195 million full-time workers – in the second quarter of 2020, according to the International Labor Organization.
“Indeed, no matter where in the world or in which sector, the crisis is having a dramatic impact on the world’s workforce,” an ILO April 7 report said.
Copyright secured by Digiprove © 2020 Patti Mohr