The "Great Lockdown" caused by the coronavirus pandemic could result in the greatest recession since the Great Depression, the International Monetary Fund said Tuesday.
In its April "World Economic Outlook," the IMF said the global economy is projected to contract sharply by 3% in 2020, much worse than during the 2008–09 financial crisis, as countries implement quarantines and social distancing practices.
"The magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetimes," said Gita Gopinath, the IMF's chief economist. "This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis."
The report said that assuming 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% in 2021 as economic activity normalizes, helped by policy support.
However, Gopinath said, the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound.
"Much worse growth outcomes are possible and maybe even likely," the report said. "This would follow if the pandemic and containment measures last longer, emerging and developing economies are even more severely hit, tight financial conditions persist, or if widespread scarring effects emerge due to firm closures and extended unemployment."
Gopinath said that in addition to sharing equipment and expertise to reinforce healthcare systems around the world, "a global effort must ensure that when therapies and vaccines are developed for Covid-19 both rich and poor nations alike have immediate access."
"Countries urgently need to work together to slow the spread of the virus and to develop a vaccine and therapies to counter the disease," the report said. "Until such medical interventions become available, no country is safe from the pandemic (including a recurrence after the initial wave subsides) as long as transmission occurs elsewhere."