How Long Will the Shock of the 'Corona Pandemic' Last... The Key Is Whether It Ends in the Second Half of the Year

IMF "Next Year's Economic Growth Rebound Depends on Whether the Pandemic Ends in the Second Half of This Year"

On the 2nd, the cherry blossom path behind the National Assembly in Yeouido, Seoul, is closed to pedestrians and vehicles to prevent the spread of the novel coronavirus infection. Photo by Jinhyung Kang aymsdream@

[Sejong=Asia Economy Reporter Kim Hyunjung] The International Monetary Fund (IMF) forecasted that the global economic growth rate will record -3.0% this year, followed by a strong rebound of 5.8% next year, with the key assumption being the "end of the COVID-19 pandemic in the second half of the year." The IMF warned that if the pandemic lasts longer than expected and leads to a resurgence next year, the growth rate could fall by up to 8 percentage points compared to the forecast.

According to the global economic outlook released by the IMF on the 14th, most countries worldwide, except for some emerging economies such as China (1.2%) and India (1.9%), are expected to experience negative growth this year, but a strong economic recovery is anticipated next year. While economic damage due to COVID-19 is inevitable this year, considering the current trend, the IMF projects a strong growth rebound of 5.8% next year, allowing most countries' economies to return to normal.

However, this forecast assumes that the pandemic will end in the second half of this year and that policy support from each country will effectively work in the market. The IMF also left open the possibility that the pandemic could last longer than expected or resurge next year. Under such negative scenarios, if containment measures continue 50% longer in 2020, the global economic growth rate is expected to fall by about 3 percentage points this year and an additional 2 percentage points next year. If COVID-19 resurges next year, the 2021 growth rate is projected to drop by 5 percentage points. If containment measures last 50% longer this year and a resurgence occurs next year, growth rates could fall by 3 percentage points this year and 8 percentage points next year. In the worst case, consecutive negative growth could occur in both this year and next year.

Along with this, the IMF identified the top priority for countries currently as suppressing the spread of COVID-19 and expanding healthcare spending. The IMF emphasized, "Efforts should be made to mitigate economic shocks through large-scale, targeted fiscal, monetary, and financial measures to support affected households and businesses, and to enable a rapid economic recovery after the end of COVID-19."

Regarding fiscal support, the IMF also stated that it should be provided in a timely manner, be "large-scale," "temporary," and "targeted." For government policies during economic recovery, it advised gradually reducing emergency support, managing the increased debt accumulated so far, and promoting domestic demand activation through overall economic stimulus.

This content was produced with the assistance of AI translation services.