China's 2020 GDP likely to double June forecast

Cornelia Mascio
Ottobre 17, 2020

The worldwide agency said it now expects global GDP to fall by 4.4% this year, slightly better than its June forecast of a 4.9% contraction in 2020.

The IMF chief economist said the foreign debts been acquired by emerging market economies will not be enough and advised that there is a need for continued global support.

This, as economists warn of the worst global recession since the Great Depression in the 1930s.

"The revision is driven by second-quarter GDP outturns in large advanced economies, which were not as negative as we had projected", she added, citing China's stronger-than-expected return to growth as a key driver.

"We call on the International Monetary Fund to prepare an analysis of the external financing needs of developing countries and sustainable financing options", the panel said.

"Think of how the virus is resurging in a number of countries".

"This crisis will leave scars", she told reporters, stemming from damage to labor markets that will take time to regain lost jobs, lost business investment and diminished schooling that will reduce the development of human capital around the world.

But the United States rebound in 2021 is expected to be 3.1 percent, 1.4 percentage points below the earlier projection.

According to the minister, International Monetary Fund raised its estimates of the rate of growth of the Egyptian economy in the fiscal year 2019/2020 to 3.5 percent instead of 2 percent in its report issued last May, which comes in line with the government estimates. It noted that "prospects have worsened significantly in some developing countries where where infections are rising rapidly" and that in India and in poorer nations in Africa and Asia, the pandemic has continued to spread and in some areas even accelerate. Other rating agencies have also revised up their forecast on China's GDP growth this year, to 1.9 percent for Moody's and 2.7 percent for Fitch. "It is essential that fiscal and monetary policy support are not prematurely withdrawn, as best possible".

The Egyptian economy still enjoys the confidence of global institutions, as a result of its flexibility in dealing with internal and external challenges, absorb shocks, and mitigate their severity as done with the coronavirus, Minister of Finance Mohamed Maait said Wednesday.

Export powerhouse Germany will see a contraction of 6.0% this year, while Spain's economy, more dependent on tourism, will contract 12.8%.

Egypt's general government's overall balance, as an emerging market and middle-income country, to GDP ratio is projected to decline -7.5 percent in 2020, -8.1 percent in 2021, -5.2 percent in 2022.

In addition, poor countries will need concessional financing as well as debt relief.

The G20 on Wednesday approved a six-month extension to mid-2021 of the Debt Service Suspension Initiative (DSSI) that freezes official bilateral debt payments and said they would consider a further six-month extension in April. The World Bank has estimated that the pandemic has thrown between 88 million and 114 million people into extreme poverty, which is defined as living on less than $1.90 a day.

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