International Monetary Fund downgrades forecast for N. Macedonia's 2020 GDP decline to 5.4%

Covid-19 to blow $28 trillion hole in world economy

China remains the lone major economy estimated to expand, with 1.9 per cent projected growth this year and an 8.2 per cent boom in 2021. The IMF said the virus was continuing to spread in large countries, including India and Indonesia, and these economies are far more dependent on hard-hit sectors such as tourism and commodities as well as on remittances and other sources of external finance. For emerging market and developing countries (excluding China) we have a downgrade with growth projected to be - 5.7 per cent in 2020 and then a recovery to 5 per cent in 2021.

The multilateral lending body, however, said global growth may see less severe contraction at -4.4% in 2020 than it envisaged in June (-5.2%), reflecting better-than anticipated June-quarter GDP growth in advanced economies, where activity began to improve sooner than expected, indicating a stronger recovery in the September quarter.

The downward revision for Indonesia comes as the International Monetary Fund has turned less pessimistic about the global economy, according to the October update of the World Economic Outlook, published on Tuesday.

IMF chief economist Gita Gopinath said in a blog posting that some US$12 trillion (S$16.3 trillion) in fiscal support and unprecedented monetary easing from governments and central banks helped to limit the damage, but employment is well below pre-pandemic levels, with low-income workers, youth and women hardest hit.

The gloomy prognosis came even after the International Monetary Fund revised its growth forecasts for this year upwards, reflecting the fact that the second quarter's recession proved shallower than feared, and countries experienced faster recoveries as they relaxed lockdowns.

Gopinath said that except for China, where output is expected to exceed 2019 levels this year, output in both advanced economies and emerging market and developing economies is projected to remain below 2019 levels even next year.

India's Mumbai faces power outage due to grid failure
Power tripping during maintenance work by the state-run MSETCL is thought to have bee the reason for the major power outag. The outage , which was first reported at 10:05 am, was initially expected to have been resolved in an hour.

India's lockdown at the end of March was the world's largest, causing the economy to contract 23.9% in the June quarter from a year ago as businesses and jobs were devastated.

So long as the pandemic is controlled next year, the fund expects a rebound of 5.2 per cent in the global economy in 2021, a forecast just 0.2 percentage points worse than in June.

"As a result, the economy is projected to contract by 10.3 per cent in 2020, before rebounding by 8.8 per cent in 2021", it said.

The uncertainty surrounding the baseline projection is unusually large.

The global economy is now in a phase of recovery from its collapse earlier in the year, Gopinath said.

But the outlook for India is down by 5.8 points to minus 10.3 percent. She pointed out that "close to 90 million people could fall below the $1.90 a day income threshold of extreme deprivation" in 2020.

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