The COVID 19 pandemic is inflicting high and rising human costs worldwide, even though some countries have re-opened their businesses, but until a precise and specific cure is discovered, the minor enhancements occurring in the world are just temporary.
As a result of the pandemic, in April 2020 World Economic Outlook (WEO) projected a sharp contraction of 3% in 2020, and claimed it to be much worse than 2008-09 financial crisis.
A revised forecast was presented by IMF in June 2020, in which the global economic growth for the for the current year was predicted to be -4.9%, far worse than before. Authorities also accept that this pandemic has had more negative impact in the first 2 quarters of 2020, than it was anticipated. Overall, IMF also stated that the total loss in global output due to coronavirus outbreak will be $12 trillion, more than 4 times of India’s total GDP.
IMF predicts a 5.4% global growth in the year 2021, far below its pre-pandemic predictions. This growth is assumed on the baseline that the pandemic will fallout. In economies with declining infection rates, the slower recovery path in the updated forecast reflects persistent social distancing into the second half of 2020, greater scarring (damage to supply potential) from the larger-than-anticipated hit to activity during the lockdown in the first and second quarters of 2020, and a hit to productivity as surviving businesses ramp up necessary workplace safety and hygiene practices.
For economies struggling to control infection rates, a lengthier lockdown will inflict an additional toll on activity with rise in unemployment, decline in output etc. Moreover, the forecast assumes that financial conditions which have eased following the release of the April 2020 WEO and will remain broadly at current levels.
As said by Dr Gita Gopinath “We are definitely not out of the woods, this crisis is like no other and we have to recover like no other”, clearly signifies that we have just begun to observe the repercussions being caused by this global recession, and there is a significant distance which is yet to be covered.