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6/24/2020

IMF Updates the World Economic Outlook Report

IMF has revised the narrowing estimate for global economy as 4.9% for 2020 from a previous forecast rate of 3%. Expectations for Turkey remain unchanged. The Turkish economy is expected to contract by 5% in 2020 to be followed by a growth rate of 5% in 2021…

The International Monetary Fund (IMF) has updated the Global Economic Outlook report.

Forecasts regarding the global economy are revised downward in the report. Global economy was estimated to narrow by 3% in the IMF Report released in April TEBA:1964/ April 15, 2020 whereas the global economy is now estimated to narrow by 4.9% in 2020. Estimated growth rate for 2021 on the other hand has been reduced to 5.4% from a rate of 5.8%.

“Recovery is likely to be more gradual than we estimated”

It is stated in the IMF Report that the COVID-19 outbreak had more adverse effects than expected on economic activities in the first half of the current year and recovery is foreseen to be more gradual than estimated previously. It is stated that economic policies should be carried out with remedies for income losses of households if deemed necessary also providing support to companies and incentives should then be lifted gradually when economies show signs of normalization. It is underlined that policy makers should be in cooperation to solve tensions in trade and technology that endanger the ultimate recovery process beyond the scope of the outbreak.

The economy of the Euro Zone will narrow by 10.2% in 2020

The growth forecast for the economies of developed countries has also been revised. Developed economies which were previously estimated to contract by 6.1% in 2020 are now predicted to narrow by 8%. The expectation for these economies for 2021 on the other hand has been raised to 4.8% from a rate of 4.5%. Economies of developing countries are foreseen to narrow by 3% in 2020 to be followed by a growth rate of 5.9% in 2021.

The US economy which was previously estimated to narrow by 5.9% in 2020 is now revised downward as 8%. Also, the growth rate estimate for 2021 has been reduced to 4.5% from 4.7%.

The growth rate estimate for United Kingdom has been reduced to -10.2% in 2020 from a rate of -6.5% raising the growth estimate for 2021 to 6.3% from a rate of 4%. Also, growth rate estimates for Japan are revised as -5.8% this year from a level of -5.2% with a growth estimate of 2.4% for the next year instead of 3%.

The economy of the Euro Zone is also estimated to narrow by 10.2% this year with a growth estimate of 6% in 2021. The economy of the said region was previously predicted to narrow by 7.5% this year to be followed by a growth rate of 4.7% next year.

The growth rate estimate for Germany has been reduced to -7.8% from -7% in 2020 raising the estimate for 2021 to 5.4% from a rate of 5.2%. Also, the growth rate estimate for France has been reduced to -12.5% in 2020 from -7.2% with raising the growth estimate for 2021 to 7.3% from 4.5%.

As for Italy, the growth rate estimate for 2020 has been reduced to -12.8% from -9.1% raising the estimate for 2021 to 6.3% from a rate of 4.8%. The growth rate estimate for Spain in 2020 has also been reduced to -12.8% from -8% raising the estimate for 2021 to 6.3% from a rate of 4.3%.

IMF has not changed the previous growth rate estimates for Turkey. The Turkish economy is expected to contract by 5% in 2020 to be followed by a growth rate of 5% in 2021.