The International Monetary Fund released new forecasts for economic growth in 2020 and 2021 for the world and forecasts for each country to account for the Covid-19 pandemic and the associated lockdowns and travel restrictions imposed by many countries. They make for pretty grim reading. The IMF says that ‘This crisis is like no other…the loss associated with this health emergency and related containment measures likely dwarfs the losses that triggered the global financial crisis.’ Despite the considerable uncertainty about when containment measures will be eased around the world and the absence of a precedent from which to take guidance, the IMF has bravely taken a shot at predicting the impact on global economic growth in 2020 and 2021. It predicts a classic V-shaped impact – a sharp contraction in all economies before a sharp rebound in 2021. For world economic growth, the IMF forecasts that world economic output will fall by 3% in 2020 before bouncing back in 2021 by 5.8%. The predicted contraction in 2020 is much more than the 0.1% decline seen in 2009 in the wake of the Global Financial Crisis.
All of the major wool consuming countries and regions will see a large decline in economic output in 2020. The IMF predicts that China’s economy will still grow in 2020, but by a measly 1.2% before growth of 9.2% in 2021. All the advanced economies will see a very strong contraction in 2020, led by Italy which is forecast to shrink by 9.1%. The IMF predicts that all advanced economies will then see a strong growth in 2021. Even with the rebound in 2021, all the advanced economies will be smaller by the end of 2021 than in 2019 before the Covid-19 pandemic.
Further details, including a chart showing the trends in economic growth for these countries and regions starting in 2000, including the IMF’s forecasts for 2020 and 2021 and details on the state of retail sales in the major wool consuming countries, can be read in the full version of this week’s edition of the NCWSBA Weekly Newsletter. Available to NCWSBA members.