IMF : Global Economy to Suffer ‘Significant Scarring
The global economy is recovering more slowly than expected from the coronavirus pandemic and will bear lingering scars from the experience, according to the International Monetary Fund.
The IMF is set to release economic growth projections June 24 that “will be, very likely, worse than what we had” in April, even as there remains “profound uncertainty” around the forecasts, Gita Gopinath, the IMF’s chief economist, said in a video recorded June 4 and released Friday as part of the seventh annual Asian Monetary Policy Forum.
“One has to be quite concerned about the path of recovery,” said Gopinath, citing the depth of the crisis, the need for labor reallocation, the onset of bankruptcies and insolvency issues, and changes in consumer behavior. “Many of these variables point to significant scarring effects.”
In April the IMF estimated the global economy would shrink by 3% this year — the deepest contraction since the Great Depression — and anticipated an even worse outcome if the coronavirus lingers or returns. That analysis saw growth rebounding to 5.8% in 2021.