Current crisis is unlike anything the world has seen before: IMF

The IMF warned on Tuesday that the current crisis is "unlike anything the world has seen before." The Fund noted that the services industry had been more severely impacted than manufacturing, which represents a change from previous crises, where a lack of investment hit manufacturing activity hardest. The global economy is on track for a more significant contraction than the IMF estimated back in April, Gita Gopinath, the institution's chief economist said on Tuesday

When European countries were in their first weeks of lockdown, the IMF said the global economy would suffer the worst financial crisis since the Great Depression of the 1930s. At the time, it forecast a contraction by 3% in 2020.

Now, despite some economies beginning to reopen, the Fund has warned that the decline could be even worse. "For the first time since the Great Depression, both advanced and emerging market economies will be in recession in 2020. The forthcoming June World Economic Outlook Update is likely to show negative growth rates even worse than previously estimated," Gopinath said in a blog post.

The pandemic started as a health emergency but soon sparked an economic crisis. Many countries have begun to lift lockdowns, but this has proven challenging and in some cases the process has been slow.

More on this subject: Coronavirus

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