(VOVWORLD) - The COVID-19 pandemic has driven the global economy into a severe decline not seen in decades. Some assessments predict that the global economy could become worse than during the Great Depression of the 1930s.
 IMF managing director Kristalina Georgieva (Photo: VNA) |
IMF senior officials told Foreign Policy magazine on Wednesday that “the crisis is far from over.” IMF managing director Kristalina Georgieva and IMF chief economist Gita Gopinath said “the recovery remains very fragile and uneven across regions and sectors.”
Alarming figures
Wall Street analysts say the pandemic will cause global GDP to lose up to 5 trillion USD. The IMF forecasts that the global economy will contract 4.9% this year, developed economies will shrink 8%, and emerging economies 3%. The World Bank predicts the world economy this year will contract 5.2%, developed economies 7%, and emerging economies 2.5%.
The US, the world's largest economy and the hardest hit by the COVID-19 pandemic in both the number of people infected and deaths, saw its GDP contract 9.1% in the second quarter, compared with minus 1.3% growth in the first quarter. The IMF forecasts that the US economy will shrink 6.6% in 2020. Some other international financial institutions believe the US economy may contract more than 8%, an unprecedented collapse in recent history.
Germany, Europe's largest economy, recorded a decline of 10.1% in the second quarter and the Eurozone economy decreased 12.1%.
According to analysts, these alarming numbers show the current economic crisis is much worse than the 2008 global financial crisis and probably more severe than the 1930s Great Depression.
Ability to bounce back
The global economy is showing signs of recovery, but a full recovery is unlikely before a vaccine in found, according to Gopinath and Georgieva.
Their opinions is shared by many experts, but with Russia recently licensing the world's first COVID-19 vaccine and many other countries hurrying to produce a vaccine, there are high expectations that the global economy will soon bounce back.
China, the world’s second largest economy, is also showing positive signs of recovery. In July, Bloomberg cited Switzerland’s UBS Group AG as saying that China's economy may grow 2.5% this year, almost twice the 1.5% growth rate predicted previously. China could see 5.5% growth in the third quarter and 6% in the last quarter of this year. These growth forecasts are based on a recovery in domestic consumption and strong investment of China.
Experts warn, however, that US-China trade war, the vaccine distribution obstacles, and unceasing geopolitical tensions heighten the risk of a global economic depression.