The IMF's latest predictions on October 13th do not look good for the world economy. The IMF expects long term economic damage from the COVID-19 pandemic, and they are not sure how long it will last. The IMF believes that the United States GDP will not return to its 2019 highs until 2022. Other countries face longer roads such as Italy where the GDP isn't expected to recover until 2025. The IMF worries that output will stay below its pre-pandemic levels as labor and capital are moving slowly to be reallocated to better industries. GDP growth in emerging markets will be among the hardest hit with growth predictions dropping about 10%. India for example was expected to grow by 40% based on 2019 predictions, but is now only projected to grow about 20% by 2024.
https://www.economist.com/finance-and-economics/2020/10/17/the-imf-predicts-that-the-world-economy-will-suffer-from-long-covid
While this news is alarming, it is consistent and in some areas improved from forecasts in June. The recovery is very dependent on two things: the vaccine and stimulus packages. With both of these being unknown at the moment, it is not a surprise that forecasts remained fairly stable.
ReplyDeleteI agree. I think that things are looking much better than they did in the early summer which is a good sign for the future. The economy can change so quickly based on new information, and things may look completely different in a few months.
DeleteI agree with Jack that yes we are in a worse economic situation right now, but it isn’t surprising. I think that the IMF could also be more conservative with their predictions of recovery right now considering the uncertainty of when a vaccine will be released. I believe once COVID is becoming more contained we will see the turnaround we need.
ReplyDeleteThese drops were expected and it may seem like it is worrisome, however, this has happened before in other recessions and it is something the world together is going to have to deal with. Luckily the economy generally fixes itself because of people's expectations, so we can expect the economy to swing back, just in a few years.
ReplyDeleteWhile this isnt great news, I think that everyone is in this together, and we need to work together with other countries who have begun recovery in order to find ways to quicker recovery for all.
ReplyDeleteWhile the impact of the pandemic has been devastating, perhaps it could be used as a wake-up call for governments to support workers that are being "reallocated". Many governments have shown themselves willing to support individuals on a level that was unthought of before. These resources might best be used to aid workers who are transitioning to more secure jobs. While this may sacrifice short-term growth rates, it will cause much less suffering (and higher growth) in the long run.
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