Coronavirus has brought world economy on its knees, is a global recession inevitable?

WION Web Team New Delhi, Delhi, India Apr 17, 2020, 10.37 PM(IST)

File photo. Photograph:( Reuters )

Story highlights

Advanced economies are the worst-hit and in these times -- even the grimmest economic forecasts show a sense of optimism.

These are unprecedented times for the global economy and that is an understatement. But, the pandemic has set back the global economy by decades.

Also read: How is the Chinese economy's shrinkage reconfiguring the global economy?

The alarm bells are ringing at IMF and world bank as pressure mounts on these institutions to help the poor countries.

Advanced economies are the worst-hit and in these times -- even the grimmest economic forecasts show a sense of optimism.

Also read: One-day coronavirus deaths in US surpasses 9/11, Iraq war toll

It’s hard not to try and find hope in circumstances not seen since the great depression. 

Worst economic collapse since the great depression

Today, the world is staring at an economic collapse -- possibly the worst in nearly a hundred years. The coronavirus pandemic has undone decades of economic development, threatening to push more people into poverty. 

Let's take a look at the three months timeline where it all began:

In January, the international monetary fund said the world economy would grow at about three per cent in 2020. Now, it says the world economy is drained.

IMF: World economy to shrinks by 3 per cent in 2020

IMF's predictions have been overturned now the global economy will contract by three per cent this year.

Let’s begin the survey of the global economic damage with the global south:

Asia to record zero growth in 2020

Coronavirus is sure to end Asia's 60-year growth streak, according to the IMF which means zero growth in 2020.

This is much worse than the global financial crisis of 2008 and that year, Asia grew at 4.7 per cent.

Take the region’s worst financial crisis, the Asian currency crisis in the 1990s. Even then, Asia grew at slightly more than one per cent.

Latin America facing the worst recession in 50 years

The IMF predicts the worst recession in half a century. One out of three people could lose their jobs in South America. That’s over 200 million people unemployed on a single continent.

Nearly half the jobs could be lost in Africa

In Africa, nearly half the jobs could be lost without urgent action. In the global north, the advanced economies are the worst-affected.

Advanced economies to shrink at 6 per cent in 2020

The IMF sees them shrinking by at least 6 per cent this year. That’s a negative growth rate. The United Kingdom’s GDP could contract by 35 per cent this quarter.

Both advanced & emerging economies in recession

A true global recession is rare and it is on now. Both advanced and emerging economies are in deep trouble at the same time.

The total output loss could be around $9 trillion.

IMF has mobilised $8 trillion

But, there is a shortage of public finances, especially in poorer countries.

Nearly two more trillion dollars are required to support developing economies.

IMF raises $11 billion from 5 countries

The IMF has also received over 11 billion dollars as a pledge from five countries.

Japan, the United Kingdom, France, Canada, and Australia have contributed.

G20 countries freeze debt repayments for poor countries

The G20 countries have suspended debt repayments. This will free up at least 20 billion dollars in poorer countries for fighting the pandemic. 

Now, China has urged the World Bank to do the same. Defer loan payments perhaps China should lead by example.