The IMF released the latest World Economic Outlook this week. Gita Gopinath, Chief Economist was on hand to deliver the news.
The global economy is expected to contract by -4.4% this year with a recovery of over 5% anticipated in 2021. This is slightly better than the outlook in June, which predicted a setback of -4.9% this year and a recovery of +5.4% in 2021.
China is now expected to grow by almost 2% in the current year. Growth of just 1% was expected in June. The setback in the USA has been mitigated with the loss of output of -8% forecast in June, now expected to be just over -4% in October. US Government borrowing of $3 trillion dollars in the financial year just ended will have assisted the process.
The setback in the EU will be around -8%, the loss of output in the UK around -9.8%. Concerns for the Indian subcontinent have increased as the total Covid cases increased to 7.5 million. Output is now expected to fall by 10% in the year.
The IMF warns, although the global economy is "coming back", the recovery will be long, uneven and uncertain. Economies will face difficult paths to pre-pandemic levels of activity. Preventing further setbacks, will require that policy support is not withdrawn prematurely. "It is important for governments to continue to support viable firms, as millions of jobs are at risk."
It is a message all too pertinent for the Chancellor Rishi Sunak. The latest data for the UK suggests the unemployment rate increased to 4.5% in August with 1.5 million out of work. The increase in the claimant count to 2.7 million in September, suggests much worse is yet to come. The furlough scheme ends this month, with the UK economy in tiers ...
That's all for this week! Have a great, safe, week-end ... Hands, Face and Space ...
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