IMF: Global economy to contract by 3.0% in 2020 due to coronavirus impacts

The global economy is expected to contract by 3% in 2020 due to the negative impact of the coronavirus outbreak on the activity, the International Monetary Fund (IMF) said in its 2020 World Economic Outlook report on Tuesday.

Additional takeaways

“IMF projects 2021 global growth at 5.8%, up 2.4 percentage points from January projection of 3.4% growth.”

“Growth projections assume pandemic peaks in the second quarter in most countries and fades in the second half of 2020, with containment measures gradually unwound.”

“Forecasts have extreme uncertainty; longer outbreak lasting through Q3 could reduce 2020 global output by another 3%.”

“Coronavirus outbreak in 2021 could reduce 2021 global output by 5% from baseline.”

“Longer outbreak in 2020 and a second outbreak in 2021 could reduce 2021 global output by 8% from baseline.”

“IMF projects US economy will contract by 5.9% in 2020 vs 2.0% growth seen in January; 2021 US growth seen at 4.7%.”

“Cumulative global GDP loss over 2020 and 2021 could be $9 trillion, greater than Germany, Japan GDP combined.”

“IMF projects euro area economy to contract by 7.5% in 2020 vs 1.3% growth seen in January; 2021 euro area growth seen at 4.7%.”

“IMF projects 2020 contractions of 9.1% for Italy, 7.0% for Germany, 7.2% for France, 6.5% for Britain.”

“IMF projects Japan 2020 contraction at 5.2% and 3.0% growth in 2021.”

“IMF projects 2020 China growth at 1.2% vs 6% growth seen in January; 2021 china growth estimated at 9.2%.”

Market reaction

These remarks don’t seem to be having a significant impact on the market sentiment. As of writing, the S&P 500 futures were up 1.42% on a daily basis.