The global economy will narrow by 4.4% in 2020 due to the effects of COVID-19, according to an International Monetary Fund World Economic Outlook report released Tuesday.

The IMF’s previous expectation was minus 5.2% for this year, the report pointed out, adding: “These are difficult times, yet there are some reasons to be hopeful.”

“The revision is driven by second quarter GDP outturns in large advanced economies, which were not as negative as we had projected; China’s return to growth, which was stronger than expected; and signs of a more rapid recovery in the third quarter,” said the report, entitled, “A Long and Difficult Ascent.”

The fund’s forecast for 2021 was positive 5.2%, down 0.2 percentage points from the previous forecast in June.

In 2018 and 2019 the world economy grew by 3.5% and 2.8%, respectively.

The report’s forecasts for advanced economies in 2020 and 2021 were minus 5.8% and positive 3.9%, respectively.

Emerging market and developing economies are expected to shrink by 3.3% in 2020 and rebound by 6% in 2021, according to the report.

The euro area economy will contract by 8.3% in 2020 and recover by 5.2% next year, the report forecast.

Only China’s economy is expected to expand – by 1.9% – in 2020, while major European economies are expected to shrink sharply, including Spain (minus 12.85%), Italy (minus 10.6%), and France and the UK (both minus 9.85).

The report’s forecast for the Turkish economy for 2020 is minus 5% and then positive 5% for 2021.

The world trade volume will also narrow by 10.4% in 2020 and recover by 8.4% in 2021, the IMF said.

Uncertainty remains

“While the global economy is coming back, the ascent will likely be long, uneven, and uncertain,” the IMF stressed.

It noted that all countries face difficult paths back to pre-pandemic levels.

The fund underlined: “To preserve jobs, it is important for governments, where possible, to continue to support viable but still vulnerable firms with moratoria on debt service and equity-like support.”

The report also said that uncertainty is continuing and kept the global economy to only moderate growth.

Extreme deprivation in 2020 may hit around 90 million people whose daily income is below $1.90, the fund stressed.

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