'The world faces the worst recession after the 1930s'

New Zealand (Infocorner Online) The International Monetary Fund (IMF) says the global economy will shrink by three percent this year,
Because, for the first time in decades, The economy of all the countries around the world is shrinking rapidly. The IMF described this as the worst crisis after the 'Great Depression' in the 1930s. The IMF said the pandemic has caused the world to 'suffer from such a crisis like never before.' The International Monetary fund added that if the coronavirus outbreak prolonged, it would be the ability test of the governments and central banks to overcome this crisis.
Gita Gopi Nath, The chief economist at the IMF, said the crisis could reduce gross global production by $9 trillion over the next two years.

Although the IMF's latest report "The World Economic Outlook" praised the 'rapid and large-scale' response to the outbreak in countries such as the UK, Germany, Japan, and the United States, the report said no country would be able to survive from the crisis. It has been indicated that if the pandemic decreases in the second half of 2020, Then the global economic growth will accelerate to 5.5 percent next year. Geeta Gopi Nath said that today's 'Great Lockdown' has presented a "shocking truth" to the policymakers who are facing "severe uncertainty about the severity and duration of the trauma". She further added, “The year 2021 is expected to be partially restructured but overall production will remain below the previous trends and there will be a lot of uncertainty about its recovery. She said that there are very few chances of development and, if so, Then they are very poor.

Geeta Gopi Nath said that for the first time since the Great Depression, a situation is being seen where both developed and developing economies are worried about recession. The IMF has warned that in the latest economies, the highest pace of development that they had before the outbreak will not be able to go back to where it was before 2022. It is expected that the growth of the US economy will decline by 5.9 percent this year, the largest annual decline after 1946. In addition, the unemployment rate in the United States will be 10.4 percent this year. Optimistically a partial recovery is expected by 2021, which could lead to a 4.7% growth in the United States.

On the other hand, the Chinese economy is expected to grow by only 1.2 percent, which is the lowest rate of growth after 1976. Australia is facing a risk of recession for the first time after 1991. The IMF had warned that there could be great risks of worse outcomes". The IMF is giving a warning which is, if the outbreak takes longer than it is expected, and the second wave comes in 2021, then it will further reduce the World GDP by 8% points. The IMP further added that the situation could lead to a further decline in debt-driven economies. The investors will not be able or to agree to lend money to some countries and this will lead to higher interest rates.

Although a long-term lockdown will disrupt the economic activity, the IMF says but it is important to maintain a quarantine and social distance. The IMF said: "In order to slow down the spread of the virus, health care measures need to be taken seriously and the healthcare system needs to be strengthened so that strong economic activities can be restored as soon as possible." "The widespread outbreaks and lack of social distance, uncertainty, and reduced demand for health services will make the situation worse." The IMF has set four priorities to deal with the outbreak.

  1. This includes more funding for the healthcare sector, 
  2. Financial support for labor and trade
  3. Continued support from the central bank
  4. Clear recovery plans.

The IMF has stressed the world to find and distribute the treatments and vaccines altogether. The Fund added that many developing countries will need debt relief in the coming months and years.

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