A spot of good news! The IMF forecasts a less severe recession than predicted in June this year! It would be in the range of 4.4% likely to be followed by a rebound of 5% next year both of which are lesser than the previous predictions.
But not all is all that good. The World Economic Outlook mentions that the global economy is still in deep recession whose effect is quite “sizable”. India in particular is likely to experience a deeper decline this year than places like the UK. So is Spain. Tourism-dependent places could be hardest hit, says the report. China’s economic response, from the view-point of being the epicentre of the pandemic, has been stronger than expected. One reason for this unexpected outcome i.e., less steep decline according to the IMF could be the positively strong and sizable responses from governments and central banks worldwide that helped stabilize household incomes, protected cash flow in firms and helped gave credit to industries when needed most.
Good news come with the bad. The IMF warns that the global recovery is not a certain because the pandemic has far from subsided as of now and most cases of slowdown was due to lockdowns and restrictions selectively imposed by governments worldwide, as also people themselves observing social distancing and other means to stay out of harm’s way.
Put bluntly, it means the time still isn’t right to start celebrating and may stretch till the time that an “effective” vaccine is not found which itself is some distance away in the present. As of now, the IMF report paints a bleak picture with slow recoveries that have already affected (and will continue) living standards worldwide with pronounced effects on poorer nations where extreme poverty is likely to rise for the first time in two decades. Negative growth would also fuel inequality more so for women, for those from lower income strata and also for those less educated.