IMF sees return to pre-Covid level in 2023

The International Monetary Fund, making a grimmer forecast, said although the "most severe shock has already occurred," it could take until 2023 for the world economy to return to its pre-Covid-19 levels.

IMF managing director Kristalina Georgieva, addressing a virtual conference from Washington, has said she expects the global economy to shrink further beyond the current estimate of -3.0 per cent of the GDP in 2020, before a "partial recovery" in 2021.

"The most severe shock has already occurred," Georgieva said, noting that 170 countries have entered negative economic growth since March.

The IMF chief, who has more leverage than any of her predecessors with the lending capacity at the fund quadrupling to $1 trillion since 2008, urged governments to "spend wisely." Her cautioning came as organisations as diverse as Goldman Sachs, Oxfam and AFL-CIO continue to urge governments to authorize the Washington-based fund to deliver $3 trillion in support to low- and middle-income countries, via a special asset class known as Special Drawing Rights.

The IMF's latest prediction, starker than its previous estimates, came close on the heels of a warning by the Asian Development Bank on the economic catastrophe yet to unfold.

"Losses to the global economy consequent to the crippling Covid-19 lockdown will be between $5.8 trillion and $8.8 trillion this year,"ADB said, more than doubling its earlier estimates, as the Great Lockdown appears to persist for a protracted period than initially forecast.

Gita Gopinath, chief economist of the IMF, estimated that the cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around $9.0 trillion dollars, greater than the economies of Japan and Germany, combined.

All such post-Covid dismal scenarios resonate with the views of UN chief economist Elliott Harris, who predicted that the global economy was on track to lose nearly $8.5 trillion in output over the next two years. "We are now facing the grim reality of a severe recession of a magnitude not seen since the Great Depression," Harris has said. "We are now facing the grim reality of a severe recession of a magnitude not seen since the Great Depression," Harris said.

Measures to contain the spread could inflict $1.7 trillion to $2.5 trillion in economic losses in Asia, and between $1.1 trillion and $1.6 trillion in China, the ADB said.

Travel restrictions and lockdowns will likely cut global trade by $1.7 trillion to $2.6 trillion and put between 158 million and 242 million people out of work, the ADB said.

According to ADB, measures to contain the epidemic spread could inflict $1.7 trillion to $2.5 trillion in economic losses in Asia, and between $1.1 trillion and $1.6 trillion in China.

Travel restrictions and lockdowns will likely cut global trade by $1.7 trillion to $2.6 trillion and put between 158 million and 242 million people out of work, the ADB said.