The IMF expects global GDP to contract by 3% in 2020. Morocco will not be spared, the IMF anticipates a 3.7% recession in the country’s economy.
According to an economist, Morocco’s GDP could sign a decline of 5% in 2020.
At the World level
About $ 9 trillion in cumulative loss to the global economy in 2020 and 2021 due to the pandemic. “This is more than the economies of Japan and Germany combined,” said Gita Gopinath, the chief economist of the International Monetary Fund, on Tuesday April 14.
For now, the IMF expects global GDP to contract by 3% this year, she said in a virtual press conference detailing the latest global economic outlook.
But this “unlike any other” crisis could also lead to a much more severe recession if the containment measures are not lifted by the end of June and if economic activity does not resume in the second half, it said. she warned.
“There is considerable uncertainty”, “making forecasts very difficult”, she admitted.
But “it is very likely that this year the world economy will experience its worst recession since the Great Depression,” she also said.
It may be less worse than in the 1930s when world GDP fell by 10% but much more severe than in 2009 (-0.1%) following the financial crisis, she said.
“This crisis poses a very serious threat to the stability of the global financial system,” said Tobias Adrian, IMF financial advisor, noting the extreme volatility of the markets, fearing a “prolonged period of dislocation in the financial markets ( which) could trigger distress among financial institutions.”
The new coronavirus left China in late December before spreading around the world.
Covid-19 had killed nearly 120,000 people on Tuesday and almost 2 million people had been diagnosed in 193 countries and territories since the start of the epidemic, according to a reports from official sources.
In an effort to stem the pandemic, governments have resolved to confine their populations, shut down non-essential businesses, drastically reduce air traffic, crippling whole swathes of the economy.
As a result, international trade has collapsed: the Fund forecasts an 11% drop in the volume of trade in goods and services in 2020.
Europe, the most affected
While in the usual economic crises, political decision-makers try to stimulate economic activity as quickly as possible by stimulating demand, this time “the crisis is to a large extent the consequence of the necessary containment measures”, notes Gita Gopinath.
For advanced countries, the recession is expected to reach 6.1%.
In the United States, where there is little social safety net and where the health system is failing, the contraction in GDP should be 5.9%. “The recession is deep (…) It will leave its mark” in the world’s leading economy, warned Gita Gopinath.
In the euro zone, GDP will even plummet by 7.5%. In Italy, the contraction will be -9.2%, in Spain of -8%.
In France, with a 7.2% recession, the IMF is more optimistic than the government, which expects an 8% drop.
Elsewhere in Europe, in the United Kingdom, the GDP will fall by 6.5%. A public institute has reported a potential fall of 13%.
In the Latin America and Caribbean region, the recession will be barely less marked (-5.2%).
For the Middle East and Central Asia, the IMF expects a drop in GDP of 2.8%.
China and India should be the only ones to create growth (+ 1.2% and + 1.9% respectively).
Rebound in 2021?
The rebound in the world economy could however occur as early as 2021, with growth expected of 5.8% provided that the pandemic is effectively brought under control in the second half of this year.
And “despite the dire circumstances”, there are reasons to be optimistic, said Gita Gopinath.
In the countries most affected, the number of new cases decreases, after the implementation of solid social distancing practices.
The scientific community is working at an “unprecedented rate” to find treatments and vaccines.
Economically, governments have acted quickly by taking “substantial” measures to protect the most vulnerable people and businesses.
And, “the crucial difference” with the crisis of the 1930s is the existence of multilateral institutions such as the IMF and the World Bank capable of providing immediate financial aid to help the most vulnerable countries.
The G7 has also expressed support for the temporary suspension of debt services for poor countries.
For advanced economies, economic recovery will require more fiscal stimulus. And this stimulus will be more effective if these measures are “coordinated”, underlined Gita Gopinath.
She further believed that the issue of state debt should be addressed once the pandemic is over.
“For the moment, the crisis requires the action of governments,” she insisted.
Finally, while the pandemic has highlighted the lack of preparedness of many countries for a health crisis of this magnitude, the IMF urges consideration of the measures that could be adopted to prevent a similar disaster from happening again in the future, advocating in particular a “more automatic” exchange of information on unusual infections and the building up of global stocks of personal protective equipment.