IMF projects global economy to shrink by 4.9% this year over Covid-19

The International Monetary Fund has sharply lowered its forecast for global growth this year because it envisions far more severe economic damage from the coronavirus than it did just two months ago.

The IMF predicts that the global economy will shrink 4.9 per cent this year, significantly worse than the 3 per cent drop it had estimated in its previous report in April. It would be the worst annual contraction since immediately after World War II.

For the United States, the IMF predicts that the nation's gross domestic product the value of all goods and services produced in the United States will plummet 8 per cent this year, even more than its April estimate of a 5.9 per cent drop. This, too, would be the worst such annual decline since the US economy demobilized in the aftermath of World War II.

The IMF issued its bleaker forecasts Wednesday in an update to the World Economic Outlook it released in April.

The update is generally in line with other recent major forecasts. Earlier this month, for example, the World Bank projected that the global economy would shrink 5.2 per cent this year.

The IMF noted that the pandemic was disproportionately hurting low-income households, imperiling the significant progress made in reducing extreme poverty in the world since 1990.