The Worst Global Recession in 80 Years Is Here and There Is No Bottom in Sight

Prospects for a quick global economic recovery from the COVID-19 pandemic are officially dead, with all major international financial institutions and private forecasters now projecting huge cumulative losses and an uneven, prolonged climb out of the world’s steepest recession in 80 years. Economic models have proven incapable of dealing with uncertainties and discontinuities of the current unprecedented global lockdown. But even though magnitudes vary, recent forecasts are headed in the same direction — down. 

• The International Monetary Fund (IMF) now expects a cumulative $12.5 trillion economic loss from COVID-19 in 2020-2021, with a 4.9 percent fall in global production this year and a 5.4 percent recovery in 2021. The IMF also presumes that the strength of the recovery remains “highly uncertain,” and that a potential second wave of global infections in 2021 would result in an additional 2.5% decline in economic growth that year.
• The World Bank has predicted a 5.2 percent global economic contraction in 2020, with the Organization for Economic Cooperation and Development foreseeing an even larger 6 percent decline. Private-sector forecasts, meanwhile, foresee global declines of as much as 12 percent this year in their worst-case scenario. 
• The synchronized nature of the slowdown in 95 percent of the world economy, especially without a major country or group of countries acting as a “locomotive engine” to pull along the rest of them.  
• The depth and duration of the global recession depend not only on the course of the virus and lockdowns, but on government stimulus measures remaining in place to support collapsing incomes, and collapsing revenues. 
  
• With no end in sight to the COVID-19 pandemic, international institutions and private forecasters alike are now projecting huge cumulative losses and a prolonged, uneven economic recovery.