The IMF predicts a fall in Russia's GDP in 2020 by 5.5%; the world economy will decline by 3%. The Fund estimates that many countries will face recession as a result of the situation with coronavirus. The International Monetary Fund (IMF) predicts a 5.5% decline in the Russian economy in 2020. Such data are provided in the April World Economic Outlook: The Great Lockdown, published by the IMF on April 14. The global economy, according to the Fund, will show a decrease of 3%. The collapse of the economy as a result of the situation with coronavirus and the measures taken by countries to curb its spread is waiting for many states this year.
Back in January, the fund predicted a 1.9% increase in Russia's GDP this year, and a 3.3% increase in global GDP. As the IMF notes, the world has changed dramatically in the three months since the last WEO update. Its assessment of both global growth and individual economies has also changed dramatically.
The IMF’s assessment of the prospects for the Russian economy turned out to be tougher than that of the World Bank, which a week earlier had presented a forecast of a decrease in Russia's GDP in 2020 by 1% (in December it expected growth by 1.6%), and in a more unfavorable scenario by 2.2%.
The day before, the head of the Accounts Chamber of the Russian Federation Alexei Kudrin, who had previously predicted a fall in the Russian economy in the corridor between 3% and 5%, said that he is now more inclined to expect a decrease of 5%. The Bank of Russia does not yet give its estimates of the fall of the Russian economy, the head of the Central Bank Elvira Nabiullina only noted that growth will be “in the negative zone”. The Ministry of Economic Development has also not yet updated its estimates (according to macro forecasts approved in mid-February, an increase of 1.9% was expected).
Based on IMF estimates, the decline in the Russian economy as a result of measures to curb the coronavirus will not be as deep as in 2009, when Russian GDP fell by 7.9%. The world economy will fall significantly lower than in 2009, when the decline was 0.1%.
“This crisis is unlike any other. (...) In normal crises, politicians try to maintain economic activity by stimulating aggregate demand as quickly as possible. This time, the crisis is largely a consequence of the necessary deterrence measures. This makes stimulating activities more difficult and, at least for the most affected sectors, undesirable”, the IMF notes.
However, as early as next year, the economy, as the fund expects, will begin to try to catch up. Thus, the IMF increases the forecast for Russia's GDP growth in 2021 by 1.5 percentage points (pp) to 3.5%. The growth of the world economy, according to the fund, will also be more intensive next year than expected in January – by 5.8%, and not by 3.4%. At the same time, the IMF notes that there is extreme uncertainty around the global growth forecast. “Economic consequences depend on factors that are difficult to predict, including pandemic paths, the intensity and effectiveness of containment measures, the extent of supply disruptions, the effects of dramatic tightening of the global financial market, shifts in spending patterns, behavioral changes (such as people avoiding shopping centers and public transport), effects of trust and unstable prices of goods”, the report says.
The economies of emerging and developing countries will decline by 1% in 2020 (previously expected to grow by 4.4%), and in 2021 they will grow by 6.6% (previous forecast – growth by 4.6%).
The economy of China, from where, as it is supposed, the spread of COVID-19 began, according to the IMF expectations, will remain in positive territory in 2020, although the growth rate will slow down compared to the previous forecast - 1.2% against 6%, and in 2021 its growth will accelerate to 9.2% from 5.8% expected in January.
The assessment of the growth of the Indian economy this year has been reduced by 4.9 percentage points, to 1.9%, in 2021 – increased by 0.9 percentage points, to 7.4%. The Brazilian economy is expected to fall by 5.3% (in January it was forecasted to grow by 2.2%), the growth forecast for 2021 is raised to 2.9% from 2.3%, the Mexican economy is expected to fall by 6.6% in 2020 and an increase of 3% in 2021.
The GDP of developed countries in 2020 will drop by 6.1% (an increase of 1.6% was expected), in 2021 it will grow by 4.5% (1.6%). A significant economic decline waits this year, according to the IMF, and the United States – by 5.9% compared with the expected growth of 2%. In 2021, the growth of the US economy will be 4.7%; the previous forecast is 1.7%. According to the IMF, in the Eurozone countries, GDP will fall even deeper – by 7.5% (January forecast – growth by 1.3%), growth by 4.7% is expected in 2021 (previous estimate – 1.4%). Moreover, the deepest decline will be in Italy (by 9.1%) and in Spain (by 8%), growth in these countries next year will be 4.8% and 4.6%. In Germany, the decline will be 7%, in France – 7.2%, in 2021 the economies of these countries can grow by 5.2% and 4.5%.
The Japanese economy this year will decline by 5.2% (the previous estimate is growth by 0.7%), in 2021 it will grow by 3% (0.5%). UK GDP will fall in 2020, the fund believes, by 6.5% (expected growth of 1.4%), and in 2021 it will grow by 4% (1.5%).