“The Great Lockdown” is how the Internatonal Monetary Fund (IMF) has described it, and it is hard to disagree.
On Wednesday the IMF provided their latest update on the world economy. Although not always accurate, their global forecasts have, in recent years, provided a good snapshot of how the economic consensus sees the world economy and it is likely to prove the same this time.
As shown in the below chart, the IMF sees a sharper contraction in growth this year and a slighty weaker rebound next year, compared to projections at the time of their last forecast in April.
I agree with the IMF’s broad overall view. It reflects that the measures taken to contain Covid-19 – namely the lockdown – have accounted for the bulk of the downturn. At the same time, and rightly so, the IMF also acknowledges that policy measures taken across the globe have been substantial.