International Monetary Fund sees slower rebound in SA's economy next year

International Monetary Fund sees slower rebound in SA's economy next year

The global community needs to do more to tackle the economic fallout of the COVID-19 crisis, the head of the worldwide Monetary Fund said on Monday.

Policy makers must avoid prematurely withdrawing support in order to avoid setbacks, Gopinath said.

The U.S. economy is expected to shrink 4.3 percent this year, with the Euro Area on track to contract 8.3 percent. "Including those in reduced-hours work programs and those counted in involuntary part-time employment, the share of workers underemployed in some advanced economies is significantly higher than the fraction of headline unemployed", the institution said in its latest WEO report.

At the same time, it improved the forecast for the average annual inflation rates in Ukraine from 4.5% to 3.2% in 2020 and from 7.2% to 5% in 2021.

Brazil and Russian Federation are projected to contract by 5.8 and 4.1 percent respectively, while India's economy could see a contraction of 10.3 percent.

However, Gopinath said that if China is excluded, global growth next year would be negative.

Global GDP growth forecasts were trimmed for 2021.

"These are hard times, yet there are some reasons to be hopeful", Gita Gopinath, economic counsellor and director of research, was quoted as saying in the outlook report, referring to progress made in treatments and vaccine trials.

China joins COVAX coronavirus vaccine alliance
Initially, China did not agree to join the alliance, after missing an early deadline to join in September. Without that data, it is unclear how safe and effective any of the experimental Chinese vaccines are.

"The virus is resurging with localized lockdowns being re-instituted".

The cumulative loss in output relative to the pre-pandemic projected path is estimated to grow from 11 trillion over 2020-2021 to 28 trillion over 2020-2025. Also expect discussions on a push for clean energy investments to help kick start a global clean energy initiative and combat climate change, as the International Monetary Fund has recently declared support for green recovery plans following the end of the pandemic.

First, greater worldwide collaboration is needed to end this health crisis, she said.

The IMF estimated Tuesday that the global economy will shrink 4.4% for 2020.

The World Bank said up to 150 million more people may be pushed into extreme poverty by 2021, the first time it has worsened in more than two decades, while the International Monetary Fund warns the crisis will exacerbate inequality, especially for women.

"There are going to be developing and low-income economies that would need debt relief and, in some cases, restructuring of debt to make sure they have the space to do the spending that they need", she said. They will also need continued support in the form of global grants and concessional financing, as well as debt relief.

"Near-term support policies should be designed with a view toward placing economies on paths of stronger, equitable, and sustainable growth. policymakers can simultaneously aim to mitigate climate change and bolster the recovery from the COVID-19 crisis", she further added. It is still the worst economic crisis since the 1930s Great Depression, the Fund said.

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