NEW YORK — The International Monetary Fund offered a grim economic prognosis for the year in a report published Tuesday, including a 5.9% contraction in U.S. output and growth of just 1.2% in China, as the coronavirus pandemic rages on.
The world economy is forecast to shrink 3% in 2020, erasing last year’s growth of 2.9%.
“It is very likely that this year the global economy will experience its worst recession since the Great Depression,” of the 1930s, IMF chief economist Gita Gopinath said in the foreword to the latest World Economic Outlook, “surpassing that seen during the global financial crisis a decade ago.”
“This crisis is like no other,” she wrote, pointing to the sheer size of the shock, the continued uncertainty about its intensity and length, and the unavailability of traditional demand-stimulating measures because the crisis “is to a large extent the consequence of needed containment measures” for COVID-19.
Looking ahead, Gopinath wrote, “A partial recovery is projected for 2021, with above trend growth rates, but the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound.”
The Washington-based organization projects steep declines for all major advanced economies: 5.2% for Japan, 6.5% for the U.K., and 7.5% for the euro area, where hard-hit Italy is forecast to shrink 9.1%.
Indian growth is seen slowing to 1.9% from last year’s 4.2%. The so-called ASEAN-5 of Indonesia, Malaysia, Philippines, Thailand and Vietnam will slip into a collective economic decline of 0.6%.
The IMF sees emerging Asia as the only region with a positive growth rate in 2020, at 1%. But even this is more than 5 percentage points below its average in the previous decade, the report noted.
The baseline assumption is that the pandemic fades in the second half, allowing for a gradual lifting of containment measures.
IMF economists expect an above-trend rebound in year-on-year growth in 2021 but said gross domestic product will remain under pre-virus trends.
“Much worse growth outcomes are possible and maybe even likely,” Gopinath warned.