IMF Sees Sharper Drop in Global Growth and Slower Recovery

The International Monetary Fund sees a sharper decline in global growth than it did in April. And it sees a more gradual recovery from the pandemic.
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The International Monetary Fund sees a sharper decline in global growth than it did in April. And it sees a more gradual recovery from the pandemic.

For 2020, the IMF sees global growth dropping 4.9%, compared with a drop of 3% in its April report.

"The covid-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast," the agency said in its World Economic Outlook Update for June.

The report is subtitled "A Crisis Like No Other, An Uncertain Recovery."

The Washington-based economic-cooperation group of 189 member countries now expects 2021 global GDP to grow 5.4%. This figure would place 2021 world GDP 6.5 percentage points lower than the agency's projections in January, the agency said. 

"The adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s," the IMF commented.

Among specific economies:

U.S. GDP in 2019 expanded 2.3%, the IMF reports. It expects GDP to fall 8% in 2020 and rebound 4.5% in 2021. 

China's economy rose 6.1% in 2019. Off that base the IMF expects it to expand by 1% in 2020 and 8.2% in 2021, the IMF says. 

In the euro area, 2019 growth was 1.3%. The IMF expects a slump of 10.2% in 2020 and a jump of 6% in 2021.

France, Italy and Spain will see a similar pattern.

France grew 1.5% in 2019. The economy is expected to drop 12.5% this year and advance 7.3% in 2021.

Italy and Spain saw their economies rise 0.3% and 2% in 2019, respectively. They are both expected to see slumps of 12.8% in 2020 and then rebounds of 6.3% in 2021.

Germany's economy edged up 0.6% last year. The IMF expects it to fall 7.8% this year and recover 5.4% next year.  

The U.K. economy grew 1.4% in 2019. It's looking at a 10.2% drop this year and a 6.3% rebound in 2021, the agency projects. 

The news was weighing on markets that were already down on an increase in coronavirus infections

The Dow Jones Industrial Average at last check was off nearly 700 points, or 2.6%,  while the S&P 500 and Nasdaq Composite declined 2.6% and 2.36%, respectively.