The International Monetary Fund will likely forecast a worse contraction in the global economy than previously estimated for 2020 and sees “profound uncertainty” about the path of recovery, IMF chief economist Gita Gopinath said in a new blog. Gopinath said the economic crisis triggered by the novel coronavirus pandemic was more global and playing out differently than past crises, with the services sector hit harder than manufacturing in both advanced and emerging market economies, and inflation low across the board. She also cited a striking divergence of financial markets from the real economy, which could portend greater volatility in financial markets and potentially sharp corrections. The IMF is due to update its World Economic Outlook on June 24. Managing Director Kristalina Georgieva last month said the Fund was “very likely” to revise downward its already pessimistic forecast for a 3% contraction in global gross domestic output in 2020, but gave no details. Gopinath said there were signs of early recovery in many countries that were reopening their economies, but new waves of infections and reimposed lockdown measures still posed risks.
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