The International Monetary Fund – IMF – has released figures that show the COVID-19 pandemic will cost the world economy $28 trillion since the start of the pandemic.
The numbers come from the IMF’s economic expert, Gita Gopinath, who revised previous estimates and says the total cost to the world economy in lost economic output stands at $28 trillion in the wake of the COVID-19 pandemic.
The revision was on the back of strong economic figures from the second and third quarters of 2020, which saw the IMF’s prediction of a 5.2% drop in growth figures, later revised to 4.4%.
Gopinath said 2020’s output figures were reminiscent of the 1930’s Great Depression, and said the world is at risk of significantly lowered investment, trade, job numbers and education for children in vulnerable, developing nations.
The IMF also warned that the growth figures for the developed and developing world are set to widen, and that rising infection numbers may well lead the IMF to revise forecasts for 2021’s growth figures from 5.4 to 5.2%.
In a statement, Gopinath has said that “the cumulative loss in output relative to the pre-pandemic projected path is projected to grow from $11 trillion over 2020-21 to $28 trillion over 2020-25… this represents a severe setback to the improvement in average living standards across all country groups.”
The IMF praised central banks around the globe for stimulus plans that softened the blow for the economy, and warned that an early removal of these support packages could prove disastrous for recovery efforts.
“The considerable global fiscal support of close to $12 trillion and the extensive rate cuts, liquidity injections, and asset purchases by central banks helped save lives and livelihoods and prevented a financial catastrophe,” Gopinath continued to explain. “To the extent possible, policies must aggressively focus on limiting persistent economic damage from this crisis,” she said.
IMF Growth Predictions and COVID-19 Cost to World Economy
- Spain June Prediction: -12.8% Latest Prediction: -12.8%
- Italy June Prediction: -12.8% Latest Prediction: -10.6%
- France June Prediction: -12.2% Latest Prediction: -9.8%
- U.K. June Prediction: -10% Latest Prediction: -9.8%
- Canada June Prediction: -8.8% Latest Prediction: -7.1%
- Germany June Prediction: -8.5% Latest Prediction: -6%
- Japan June Prediction: -5.8% Latest Prediction: -5.3%
- U.S. June Prediction: -7.2% Latest Prediction: -4.3%
- China June Prediction: +1.4% Latest Prediction: 1.9%
- World June Prediction: -5.6% Latest Prediction: -4.4%
“Governments should continue to provide income support through well targeted cash transfers, wage subsidies and unemployment insurance,” she said. “To prevent large-scale bankruptcies and ensure workers can return to productive jobs, vulnerable but variable firms should continue to receive support – wherever possible – through tax deferrals, moratoria on debt service and equity-like injections.”
The IMF’s chief economic counsellor added that “employment remains well below pre-pandemic levels and the labour market has become more polarised with low-income workers, youth, and women being harder hit.”
“The poor are getting poorer with close to 90 million people expected to fall into extreme deprivation this year. The ascent out of this calamity is likely to be long, uneven, and highly uncertain,” Gopinath concluded.