The International Monetary Fund has released its quarterly World Economic Update 2020, projecting the global economy will contract by three per cent as a result of the COVID-19 pandemic.
It remarked that the expected downsize of the world economy will be worse than that of the 2008-09 financial crisis.
“In a baseline scenario--which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound—the global economy is projected to grow by 5.8 percent in 2021 as economic activity normalizes, helped by policy support.”
The risks for even more severe outcomes, however, are substantial, the IMF warned.
For specific countries, it projected Malta’s economy to contract by 2.8 per cent in 2020, growing to an impressing seven per cent in 2021. It also projects an unemployment rate of five per cent locally in 2020, down to 4.4 per cent in 2021.
Commenting on a global level, the IMF said:
“Effective policies are essential to forestall the possibility of worse outcomes, and the necessary measures to reduce contagion and protect lives are an important investment in long-term human and economic health.
“Because the economic fallout is acute in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically.
“And internationally, strong multilateral cooperation is essential to overcome the effects of the pandemic, including to help financially constrained countries facing twin health and funding shocks, and for channeling aid to countries with weak health care systems.”
Read the full report here.