While many observers have gradually shown more optimism, thanks to the progressive easing of restrictive measures and the restarting of many economies, the fund’s latest analysis did not bode well.
The forecasts formulated by the IMF in April, therefore in full coronavirus emergency, they could even be downward magazines.
IMF alert: what will really happen
The global economy will contract much more than initially estimated. To say the chief economist of the International Monetary Fund, Gita Gopinath.
In April, when most European countries ended in lockdown, the IMF predicted a worse financial crisis than that observed during the Great Depression of the 1930s and estimated a 3% decrease for 2020.
Today, despite the fact that many states around the globe have relaxed the restrictive measures, those same forecasts they could be made worse from the bottom, according to which the economic collapse will prove more dramatic than expected.
“For the first time since the Great Depression, both advanced and emerging economies will end the year in recession. The June World Economic Outlook update will likely show even worse negative growth rates compared to those initially estimated “.
The crisis, we can still read in the blog post published by the chief economist, will be something that the world has never seen before.
When will the recovery start?
The current crisis, Gopinath pointed out, has proved profound but above all different from those of the past. The service sector it was much more affected than manufacturing (generally neglected by the lack of investments).
For this reason, unlike past recessions, this could be followed by a rapid recovery brought about by recovery in consumption.
Those of the IMF, however, are only hypotheses since the crisis could lead to a contraction in spending and a greater one propensity to save.
The challenges for Italy
The International Monetary Fund has also returned to talk about Italy, but not in the post of the chief economist. The latest considerations on the Belpaese were made by the director Kristalina Georgieva, which during the General States highlighted the 5 main challenges for the Peninsula:
- reduction of bureaucracy in the PA;
- expand efficiency in investments;
- tax reform;
- loosen rules to improve the competition;
- reduce regional disparities.
These challenges, the IMF number one continued, are well known and the current one should be considered as a crucial moment to face them.