The global economic outlook is less bleak than projected in June, the International Monetary Fund (IMF) has said, hinting that the organisation’s forecasts for growth will be raised next month. “Recent incoming data suggests that the outlook may be somewhat less dire” than projected in the Washington-based crisis lender’s World Economic Outlook published in June, spokesman Gerry Rice said, noting that “parts of the global economy [are] beginning to turn the corner”.

As the coronavirus has moved through the world, economists have been forced to constantly revise their forecasts for growth. The IMF is set to update its global outlook on October 13, although Rice did not reveal details about the new projection. In its June forecast, the fund said world gross domestic product would drop by 4.9 per cent and the virus would wipe out US$12 trillion over two years.

We’re also seeing signs of global trade slowly beginning to recover. I would emphasise we are not out of the woods. However, China and some other advanced economies performed better than expected in the second quarter of 2020, Rice said, partly due to the easing of lockdown measures after the near total shutdowns earlier in the year. “We’re also seeing signs of global trade slowly beginning to recover,” Rice added. “I would emphasise we are not out of the woods,” Rice said, calling the outlook “very challenging” with emerging markets facing a “precarious” situation due to the coronavirus.

Economists also fear that a second wave of infections could damage growth. Governments including Britain and France have reinstituted some restrictions in recent days, although on a much more limited scale than earlier in the year.

Rice said households and businesses in the United States continue to face challenges and signaled that the fund supports more fiscal support for the economy. Talks on another round of stimulus are deadlocked in Washington weeks before US President Donald Trump stands for a second term in the November polls.

In a column earlier this month, IMF leader Kristalina Georgieva and chief economist Gita Gopinath said governments should continue to support workers and businesses since the unprecedented nature of the crisis could give rise to a wave of bankruptcies and job destruction. “This crisis, however, is far from over,” they wrote. “The recovery remains very fragile and uneven across regions and sectors. To ensure that the recovery continues, it is essential that support not be prematurely withdrawn.”

They cautioned that, “Though the world has learned to live with the virus, a full recovery is unlikely without a permanent medical solution.

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: