Daily Management Review

IMF Predicts Huge Hit To Australian Economy Due To Coronavirus Pandemic


IMF Predicts Huge Hit To Australian Economy Due To Coronavirus Pandemic
The economic impact of the coronavirus pandemic will impact the Australian economy and the hit will likely be the worst among the countries in the Asian region, warned the International Monetary Fund (IMF).  
A dire picture for growth and unemployment in 2020 was painted by the updated report in the World Economic Outlook in which the IMF made the latest forecasts. The report said that economic fallout of the "Great Lockdown" around the world, which was like nothing the world had seen before, was hard to predict. 
With respect to the Australian economy, the IMF report stated that there would be a shrinking og 6.7 per cent this year in the country’s economy with an average unemployment rate of 7.6 per cent.
"This crisis is like no other," the report warned. "It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago."
The report also predicted a 3 per cent shrinking of the world economy for the current year which is a greater impact on the global economy than the global financial crisis of 2008-09. 
The report however predicted that the economic hit in the advanced economies – most of which have been hit hard by the pandemic and have had to resort to long and strict lockdown measures to contain the spread of the virus, with a prediction of the economies shrinking by 6.1 per cent in 2020.
The report predicted that the shrinkage in the advanced economies for the current year to be as follows:
United States with –5.9 per cent, Japan with –5.2 per cent, the United Kingdom with –6.5 per cent, Germany with –7.0 per cent, France with –7.2 per cent), Italy with –9.1 per cent, and Spain with –8.0 per cent.
The report however also predicted the coronavirus would slowly fade away during the second half of the current year and then the containment measures imposed by many countries across the world will by lifted gradually. That will give a chance to the global economy to partially bounce back in 2021 with a growth rate of about 5.8 per cent.
However, the IMF also warned that its forecasts were shrouded with considerable uncertainty and it was possible that the actual growth projections could be worse than it has predicted. 
"As of early April 2020 the path of the COVID-19 pandemic remains uncertain," the report said. "Strong containment efforts in place to slow the spread of the virus may need to remain in force for longer than the first half of the year if the pandemic proves to be more persistent than assumed in the World Health Organisation baseline. Once containment efforts are lifted and people start moving about more freely, the virus could again spread rapidly from residual localised clusters” it said.
"Moreover, places that successfully bring down domestic community spread could be vulnerable to renewed infections from imported cases. In such instances, public health measures will need to be ramped up again, leading to a longer downturn than in the baseline forecast," the report forecast.