In a document updated in January 2020 on the world economic outlook, the IMF estimated that the world economy would grow by 3.3% in 2020 and 3.4% in 2021. These figures had already been lowered compared to prior forecasts, including the declining economic activity in countries such as India.
But these forecasts have been significantly distorted by the spread of the COVID pandemic around the world that no one expected. The economic repercussions of this pandemic were soon felt. Several countries, such as the USA, France, China, and Germany, have had to adopt more or less strict lockdown measures to curb the virus's spread. These measures have paralyzed these countries' economies, most of which are the locomotives of world trade.
In an updated version of the world economic outlook issued in April 2020, the IMF worries about the unprecedented impact of COVID 19. The report admits that the forecasts for world growth are uncertain and that the economic consequences depend on factors whose interaction is difficult to predict. Nevertheless, the IMF predicts a much more severe impact than that of the financial crisis of 2009. New projections estimate the world economy's growth rate at - 3% if no effective stimulus measure is implemented. This recession will be particularly strong in "advanced" countries such as the Eurozone, the USA, Canada, Great Britain, and Japan, which will decline by around 6%. According to the same report, the volume of world trade should fall by 11%.
Several stimulus packages have already been announced that should help the world economy cope with this unprecedented crisis. The European Union is currently discussing an exceptional aid plan worth 750 billion euros for the post-COVID recovery. Several other countries in the world are organizing on their scale. These extraordinary measures clearly show the exceptional nature of the situation and help mitigate the effects of the crisis.
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World merchandise trade is set to plummet by between 13 and 32% in 2020. How will this affect the economy?