## ch1

## Source details

**Canonical URL:** [ch1](https://www.imf.org/-/media/files/publications/weo/2020/october/english/ch1.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/weo/2020/october/english/ch1.pdf.md)
- [Structured JSON version](/-/media/files/publications/weo/2020/october/english/ch1.pdf.json)

---

### Industrial production, high-frequency indicators, and recent momentum
- Retail sales have generally recovered stronger than industrial production.
- In the COVID-19 recession, service sectors have seen larger contractions than has manufacturing.
- Business surveys (purchasing managers) indicate:
  - Firms in the United States, euro area, China, and Brazil expanded output successively in July and August compared with the previous month.
  - The opposite was true elsewhere (for instance, in India, Japan, and Korea).
- Global trade and industrial production picked up as lockdowns were eased.
- Commodity prices have lifted since April; inflation generally remains below pre-pandemic levels.
- Global activity indicators show a pick-up in activity in the third quarter after the trough in the second quarter, but momentum going into the fourth quarter appears to be slowing.
- For September, indicators point to stronger activity in manufacturing but some setback for services, most likely reflecting the increase in infections.
- Weekly initial jobless claims in the United States continued close to 1 million into late September, indicating sustained widespread layoffs and adverse impacts on household income.

### Policy response: fiscal, monetary, and financial conditions
- Massive policy support has prevented worse outcomes.
- Discretionary revenue and spending measures announced so far in advanced economies amount to more than 9 percent of GDP, with another 11 percent in various forms of liquidity support, including equity injections, asset purchases, loans, and credit guarantees.
- The response in emerging market and developing economies is about 3.5 percent of GDP in discretionary budget measures and more than 2 percent in liquidity support.
- Prominent initiatives include the €750 billion European Union pandemic recovery package–fund (more than half of it grant-based) and a wide range of temporary lifeline policies worldwide (cash and in-kind transfers; wage subsidies; expanded unemployment insurance; tax deferrals; regulatory initiatives; release of buffers).
- Central bank actions in advanced economies involved diverse, large-scale asset purchases and relending facilities; the Federal Reserve changed its monetary policy strategy to a flexible average inflation target of 2 percent over time.
- Emerging market central banks combined interest rate cuts, new relending facilities, and, in many cases for the first time, asset purchases.
- Financial conditions have generally continued to ease since June for advanced economies and for most emerging market and developing economies, producing a partial disconnect between financial markets and the real economy.
- Currency movements (April to late September):
  - The dollar depreciated by over 4 ½ percent in real effective terms.
  - The euro appreciated by close to 4 percent.
  - The Chinese renminbi has strengthened; currencies of other Asian emerging market economies have generally remained stable in real effective terms.
  - The Russian ruble depreciated; currencies of countries severely affected by the pandemic or with vulnerable external or fiscal positions (such as Argentina, Brazil, and Turkey) have also weakened.

### Baseline assumptions and forecast considerations
- Key baseline assumptions:
  - Stronger-than-anticipated GDP outturns in the second quarter (implying an upward revision to the 2020 forecast).
  - Persistent social distancing and enhanced workplace safety standards: social distancing will continue into 2021 but then fade over time, with local transmission brought to low levels everywhere by the end of 2022.
  - Possibility of targeted renewed lockdowns in zones with rising infections.
  - Scarring: the deep downturn in 2020 is assumed to damage supply potential (firm closures, exit of discouraged workers, resource mismatches).
  - Policy support and financial conditions: fiscal baseline reflects the $6 trillion direct tax and spending measures announced and implemented worldwide so far; major central banks are assumed to maintain current settings throughout the forecast horizon to the end of 2025; financial conditions are assumed to remain broadly at current levels.
  - Commodity prices: average petroleum spot prices per barrel are projected at $41 in 2020 and $43.8 in 2021; oil futures curves indicate prices are expected to rise thereafter toward $48, some 25 percent below the 2019 average. Nonfuel commodity prices are expected to rise faster than assumed in April and June.

### Projections and headline outlook
- Global growth is projected at –4.4 percent in 2020.
- World Output (percent):
  - 2019 = 2.8; 2020 = –4.4; 2021 = 5.2.
  - The 2020 projection is 0.8 percentage point above the June 2020 WEO Update forecast.
  - The 2021 projection of 5.2 percent is 0.2 percentage point lower than in the June 2020 WEO Update.
- World Growth Based on Market Exchange Rates: 2019 = 2.4; 2020 = –4.7; 2021 = 4.8.
- Advanced Economies:
  - Advanced Economies: 2019 = 1.7; 2020 = –5.8; 2021 = 3.9.
  - The 2020 projection for advanced economies is 2.3 percentage points stronger than in the June 2020 WEO Update.
  - United States: 2019 = 2.2; 2020 = –4.3; 2021 = 3.1.
  - Euro Area: 2019 = 1.3; 2020 = –8.3; 2021 = 5.2.
- Emerging Market and Developing Economies (EMDEs):
  - Emerging Market and Developing Economies: 2019 = 3.7; 2020 = –3.3; 2021 = 6.0.
  - China: 2019 = 6.1; 2020 = 1.9; 2021 = 8.2.
  - India (fiscal year basis): 2019 = 4.2; 2020 = –10.3; 2021 = 8.8.
  - Emerging market and developing economies excluding China: 2020 = –5.7; 2021 = 5.0.
  - Growth among low-income developing countries: 2019 = 5.3; 2020 = –1.2; 2021 = 4.9.
- Medium-term: after the 2021 rebound, baseline forecasts envisage growth slowing to about 3.5 percent into the medium term.

### Labor markets, poverty, and human capital
- Projections imply wide negative output gaps in 2020 and 2021 and elevated unemployment rates across advanced and emerging market economies.
- Including reduced-hours work programs and involuntary part-time employment, underemployment in some advanced economies is significantly higher than headline unemployment.
- Close to 90 million people could fall below the $1.90 a day income threshold of extreme deprivation this year.
- More than 1.6 billion learners worldwide have been affected by school and university closures (UNESCO (2020) estimate).
- School closures reduce learning opportunities and exacerbate childcare gaps, limiting parents’ ability to work, particularly mothers; absent remedial actions, lower lifetime schooling is associated with lower lifetime income.
- Welfare measure findings for 56 EMDEs: the average welfare improvement from 2002 to 2019 was equivalent to a 6 percent increase in annual consumption levels every year; a setback in welfare in 2020 could exceed 8 percent under parsimonious estimates.

### Debt, fiscal pressures, and public-finance implications
- Sovereign debt to GDP in advanced economies is projected to rise by 20 percentage points to about 125 percent of GDP by end-2021.
- Sovereign debt to GDP in EMDEs is projected to rise by more than 10 percentage points to about 65 percent of GDP by end-2021.
- Low interest rates mitigate debt service costs mainly for advanced economies with many negative-yielding sovereign bonds; however, the ratio of sovereign debt service to tax revenue is anticipated to increase for several emerging markets and low-income countries.

### Risks, scenarios, and quantitative scenario results (G20 Model)
- Downside scenario assumptions: containment proves more difficult; slower progress on vaccines and treatments; financial conditions tighten.
  - Quantitative impacts (relative to baseline):
    - Global growth in 2020 is roughly ¾ percentage point weaker.
    - Global growth in 2021 is almost 3 percentage points weaker.
    - By 2025 the level of global GDP is still roughly 1.5 percent below baseline.
    - Debt-to-GDP ratios rise by well above 10 percentage points, on average, for advanced economies by 2022; by 5 percentage points for emerging market economies by 2022.
- Upside scenario assumptions: faster advances on treatments and vaccines; early and substantial ramp-up in vaccine production and cooperation.
  - Quantitative impacts (relative to baseline):
    - Global growth is roughly ½ percentage point higher in 2021.
    - Global growth is roughly 1 percentage point higher by 2023.
    - By 2025 the level of global GDP is roughly 2 percent above the baseline.
    - Debt-to-GDP ratios fall by roughly 5 percentage points for both advanced and emerging market economies by the end of the WEO horizon.

### Near-term and medium-term policy priorities
- Near-term dual priority: ensure adequate resources for health care systems and limit economic damage.
- Immediate policy measures where pandemic is accelerating:
  - Targeted temporary tax breaks; wage subsidies; cash transfers; postponements of financial payments; paid sick and family leave; expanded unemployment insurance; temporary credit guarantees and loan restructuring.
  - Retraining and reskilling; extended income support during transitions.
  - Central banks: boost credit provision, use liquidity support, regulatory easing of loan classification and provisioning, asset purchases and forward guidance where rates at the effective lower bound.
- Where reopening is under way:
  - Gradually remove targeted support calibrated to pace of recovery; redeploy fiscal resources to public investment (renewable energy, grid efficiency, retrofitting buildings).
  - Maintain social spending to protect the vulnerable and provide hiring subsidies, retraining, and balance-sheet repair.
  - Monetary policy: accommodative stance where inflation expectations are anchored to keep borrowing costs low.
- Medium-term priorities:
  - Invest in health, education, and high-return infrastructure that also supports lower carbon dependence.
  - Research spending to facilitate innovation and technology adoption.
  - Strengthen social assistance and social insurance to make gains more equitable.
  - Prudent debt management: extend maturities and lock in low interest rates; improve debt transparency; consider gradual consolidation after crisis.

### SME liquidity and solvency: risks and policy options
- SMEs are particularly vulnerable; firms in distress account for 9 to 13 percent of total SME (in sample) employment depending on stress measure—almost a doubling of SME jobs at risk due to liquidity risks and a 50 percent increase due to insolvency risks versus a no-COVID scenario.
- Sectoral distress: using illiquidity as distress measure, share of jobs at risk climbs to 30 percent for “arts and entertainment” and 40 percent for “food and accommodation.”
- Illustrative policy simulation: giving all SMEs 5 percent of their pre-pandemic annual revenues (accounting for more than 4 percent of GDP) as a cash transfer:
  - Government loans versus equity(-like) injections:
    - Only equity(-like) injections would reduce insolvency risks.
    - Equity(-like) injections would reduce the share of jobs at risk by almost 3 percentage points relative to the no-policy panel.
- Policy recommendations:
  - Extend support for longer; consider equity(-like) interventions where fiscal space allows.
  - For larger firms: consider direct equity injections or junior debt claims with warrants.
  - For SMEs: combine grants with a temporarily higher future corporate tax rate as an equity-like solution (administration challenges noted).
  - Cut legal and financial costs of bankruptcy to avoid overwhelming courts.

### Commodity markets, food prices, and coal sector findings
- Food and agriculture:
  - IMF food and beverage price index increased by 0.7 percent.
  - Meat price index fell by 7.1 percent from the April baseline.
  - Wholesale pork prices declined by 4.5 percent.
  - Rice is up by 12.6 percent.
  - Corn plummeted by 13.0 percent.
  - Soybean prices declined by 13.0 percent.
  - Food prices are projected to rise 0.4 percent year over year in 2020 and then 4.3 percent in the year thereafter.
- Coal and energy:
  - Coal accounts for about 44 percent of all CO2 emissions and 72 percent of all power sector emissions.
  - The top five coal-consuming countries (China, India, United States, Russia, Japan) account for 76.7 percent of global coal consumption.
  - China accounts for about half of global coal consumption.
  - Emerging markets account for 76.8 percent of coal consumption.
  - Globally, industry takes about 20 percent of total coal consumption.
  - Empirical patterns:
    - Per capita coal consumption has already peaked in 73 out of 84 countries whose share of coal in total energy consumption at some point crossed 5 percent.
    - Average annual decline across these countries was 2.3 percent between 1971 and 2017.
    - On average it takes 43 years to phase out coal after the peak in coal consumption per capita has been reached.
    - Combining speed of decline and interval between relative and absolute peaks implies, on average, 76 years to phase out coal once it reaches its largest share in the energy mix.
  - Turning points:
    - Coal attains its maximum share at an income level of $9,600 per capita.
    - The turning point of absolute coal dependence ranges from $35,000 to $39,000.
  - Country examples of five-year reductions in coal consumption include: United Kingdom 2018–12.4 percent reduction; China 2017–6.2 percent reduction; United States 2018–5.3 percent reduction.
  - Coal is 2.2 times as carbon intense as natural gas when burned to generate both heat and electricity.
- Policy implications for accelerating coal decline:
  - Compensate losers from a coal phaseout, reduce capital constraints to favor investment in renewables, provide international financial and technical assistance for grids, and limit funding of new coal plants where alternatives exist.
  - Carbon-capture and storage (CCS) may be viable but is currently expensive absent substantial carbon pricing.

### Annex tables and regional snapshots (selected figures)
- North America (aggregate): Real GDP 2019 1.9, 2020 –4.9, 2021 3.3.
- United States: Real GDP 2019 2.2, 2020 –4.3, 2021 3.1; Unemployment 2019 3.7, 2020 8.9, 2021 7.3.
- Latin America and the Caribbean: Real GDP 2019 0.0, 2020 –8.1, 2021 3.6.
- Middle East and Central Asia (aggregate): Real GDP 2019 1.4, 2020 –4.1, 2021 3.0.
- Sub-Saharan Africa (aggregate): Real GDP 2019 3.2, 2020 –3.0, 2021 3.1.
- World real per capita output (constant 2017 international dollars at PPP) sample entries:
  - World: 2020 –5.6; 2021 4.0.
  - Advanced Economies: 2020 –6.2; 2021 3.6.
  - Emerging Market and Developing Economies: 2020 –4.7; 2021 4.8.
  - China: 2019 6.3; 2020 –2.7; 2021 7.2.
  - India: 2019 5.0; 2020 –11.2; 2021 7.7.

*Source: Chapter 1, "Global Prospects and Policies," World Economic Outlook, October 2020 (extracts).*

### 1. Industrial Production—Manufacturing

### 1. Industrial Production—Manufacturing

### Industrial production, retail sales, and sectoral patterns
- Retail sales have generally recovered stronger than industrial production.
- In the COVID-19 recession, service sectors have seen larger contractions than has manufacturing.
- Business surveys (purchasing managers) indicate:
  - Firms in the United States, euro area, China, and Brazil expanded output successively in July and August compared with the previous month.
  - The opposite was true elsewhere (for instance, in India, Japan, and Korea).
- Global trade and industrial production picked up as lockdowns were eased.
- Commodity prices have lifted since April.
- Inflation generally remains below pre-pandemic levels.

### High-frequency indicators and recent momentum
- Global activity indicators show a pick-up in activity in the third quarter after the trough in the second quarter, but momentum going into the fourth quarter appears to be slowing.
- For September, indicators point to stronger activity in manufacturing but some setback for services, most likely reflecting the increase in infections.
- Weekly initial jobless claims in the United States continued close to 1 million into late September, indicating sustained widespread layoffs and adverse impacts on household income.
- Reopening has slowed as new infections have increased (Government Response Index / Stringency Index / Containment and Health Index / Economic Support Index dynamics are noted).

### Policy response, fiscal and monetary support
- Massive policy support has prevented worse outcomes.
- Discretionary revenue and spending measures announced so far in advanced economies amount to more than 9 percent of GDP, with another 11 percent in various forms of liquidity support, including equity injections, asset purchases, loans, and credit guarantees.
- The response in emerging market and developing economies is about 3.5 percent of GDP in discretionary budget measures and more than 2 percent in liquidity support.
- Prominent policy initiatives include the €750 billion European Union pandemic recovery package–fund (more than half of it grant-based) and a wide range of temporary lifeline policies worldwide (cash and in-kind transfers; wage subsidies; expanded unemployment insurance; tax deferrals; regulatory initiatives to ease classification rules and provisioning requirements for banks’ nonperforming loans; release of buffers).
- Central bank actions in advanced economies have involved more diverse, larger scales of asset purchases and relending facilities, supporting credit provision to a wide range of borrowers.
- The Federal Reserve announced changes in its monetary policy strategy, moving to a flexible average inflation target of 2 percent over time.
- Emerging market central banks’ responses combined interest rate cuts, new relending facilities, and, for the first time in many cases, asset purchases.

### Financial conditions and capital flows
- Financial conditions have generally continued to ease since June for advanced economies and for most emerging market and developing economies, implying a continuing disconnect between financial markets and the real economy that partly reflects the unprecedented policy support.
- Equity markets in advanced economies have mostly regained (and in some cases exceeded) their levels from the start of the year; sovereign bond yields are broadly unchanged or have declined further since June; corporate spreads have dropped further, particularly for high-yield credit.
- Sovereign yields in emerging markets have generally declined in recent months; spreads over US Treasury securities have continued to compress since June.
- Steps to support dollar liquidity (such as central bank swap lines), together with the recovery under way in China, have helped rekindle portfolio flows to some emerging markets after the sharp reversal in March, but the recovery in portfolio flows is uneven, with some countries continuing to experience large outflows.
- Among major currencies:
  - The dollar depreciated by over 4 ½ percent in real effective terms between April and late September.
  - The euro appreciated by close to 4 percent over the same period.
  - The Chinese renminbi has strengthened and currencies of other Asian emerging market economies have generally remained stable in real effective terms.
  - The Russian ruble depreciated; currencies of countries severely affected by the pandemic or with vulnerable external or fiscal positions (such as Argentina, Brazil, and Turkey) have also weakened.

### Considerations for the forecast and baseline assumptions
- Fundamental uncertainty remains regarding the pandemic and associated factors: path of the pandemic, adjustment costs, effectiveness of economic policy response, and evolution of financial sentiment.
- Baseline forecast assumptions include:
  - Stronger-than-anticipated GDP outturns in the second quarter (implying an upward revision to the 2020 forecast relative to earlier projections).
  - Persistent social distancing and enhanced workplace safety standards: social distancing will continue into 2021 but then fade over time as vaccine coverage expands and therapies improve, with local transmission brought to low levels everywhere by the end of 2022.
  - Possibility of renewed lockdowns for particular zones where infections are still rising, even if stringent nationwide shutdowns are not repeated.
  - Scarring: the deep downturn in 2020 is assumed to damage supply potential to varying degrees across economies (through firm closures, exit of discouraged workers, and resource mismatches).
  - Policy support and financial conditions: fiscal policy settings in the baseline reflect the $6 trillion direct tax and spending measures announced and implemented worldwide so far; major central banks are assumed to maintain their current settings throughout the forecast horizon to the end of 2025; financial conditions are assumed to remain broadly at current levels.
  - Commodity prices: average petroleum spot prices per barrel are projected at $41 in 2020 and $43.8 in 2021, higher than in the April and June forecasts; oil futures curves indicate that prices are expected to rise thereafter toward $48, some 25 percent below the 2019 average. Nonfuel commodity prices are expected to rise faster than assumed in April and June.

### Projections and outlook
- Global growth is projected at –4.4 percent in 2020.

*Source: Chapter 1, "Global Prospects and Policies," World Economic Outlook, October 2020 (extracts).*

### 0.8 percentage point above the June 2020 WEO Update

### ch1 - 0.8 percentage point above the June 2020 WEO Update

### Global outlook and headline projections
- World Output: 2019 = 2.8; 2020 = –4.4; 2021 = 5.2.
- The 2020 projection is 0.8 percentage point above the June 2020 WEO Update forecast (Table 1.1).
- The stronger 2020 projection reflects two competing factors: upward impetus from better-than-anticipated second quarter GDP outturns (mostly in advanced economies) versus downdraft from persistent social distancing and stalled reopenings in the second half of the year.
- Global growth is projected at 5.2 percent in 2021, which is 0.2 percentage point lower than in the June 2020 WEO Update.
- The projected 2021 rebound implies a small expected increase in global GDP over 2020–21 of 0.6 percentage point relative to 2019.
- World Growth Based on Market Exchange Rates (Table 1.2): 2019 = 2.4; 2020 = –4.7; 2021 = 4.8.

### Advanced economies
- Advanced Economies: 2019 = 1.7; 2020 = –5.8; 2021 = 3.9.
- The 2020 projection for the advanced economy group is 2.3 percentage points stronger than in the June 2020 WEO Update.
- Advanced-economy group 2021 GDP remains some 2 percent below 2019 levels.
- United States: 2019 = 2.2; 2020 = –4.3; 2021 = 3.1.
  - The US economy is projected to contract by 4.3 percent in 2020, before growing at 3.1 percent in 2021.
- Euro Area: 2019 = 1.3; 2020 = –8.3; 2021 = 5.2.
  - A deeper contraction of 8.3 percent is projected for the euro area in 2020, reflecting a sharper downturn than in the United States in the first half of the year.
- Asian advanced economies are projected to have more moderate downturns than those of Europe.

### Emerging market and developing economies (EMDEs)
- Emerging Market and Developing Economies: 2019 = 3.7; 2020 = –3.3; 2021 = 6.0.
- The 2020 projection is 0.2 percentage point weaker than in the June 2020 WEO Update.
- China: 2019 = 6.1; 2020 = 1.9; 2021 = 8.2.
  - China is projected to grow by about 10 percent over 2020–21 (1.9 percent in 2020 and 8.2 percent in 2021).
- India (fiscal year basis): 2019 = 4.2; 2020 = –10.3; 2021 = 8.8.
  - Revisions are particularly large for India due to a much more severe GDP contraction in Q2 2020.
- Emerging market and developing economies excluding China: 2020 = –5.7; 2021 = 5.0.
- Growth among low-income developing countries: 2019 = 5.3; 2020 = –1.2; 2021 = 4.9.
- All EMDE regions are expected to contract in 2020, including emerging Asia, Latin America, Middle East and Central Asia, and oil-exporting countries in sub-Saharan Africa.

### Sectoral/behavioral factors influencing recovery
- Recovery is characterized by persistent social distancing until health risks are addressed; countries may again tighten mitigation measures depending on virus spread.
- Medium-term output is affected by scarring: bankruptcies, lower labor force participation, and obstacles to resource reallocation.
- Structural change expected: redeployment away from sectors constrained by distancing, workplace changes for safety, adoption of technologies supporting remote working, and increased online purchases — persistent effects on potential output.

### Unemployment and labor market
- Projections imply wide negative output gaps in 2020 and 2021 and elevated unemployment rates across advanced and emerging market economies.
- Including reduced-hours work programs and involuntary part-time employment, the share of workers underemployed in some advanced economies is significantly higher than headline unemployment.
- Labor market data are less comprehensive for emerging markets, but surveys and official estimates indicate significant increases in unemployment rates in several EMDEs.

### Medium-term growth and potential output
- After the 2021 rebound, baseline forecasts envisage growth slowing to about 3.5 percent into the medium term.
- Over the medium term, advanced and EMDEs will only modestly progress toward the 2020–25 path projected before COVID-19, implying a severe setback to improvement in average living standards.
- Among the 10 largest advanced economies, medium-term potential GDP is expected on average to remain 3.5 percent below the January 2020 WEO (pre-pandemic) projection.
- Among the 10 largest emerging markets, the average medium-term potential GDP decline is 5.5 percent.
- Advanced-economy medium-term growth is expected to slow to 1.7 percent.
- EMDE growth is projected to decline to 4.7 percent by 2025, below the 5.6 percent average of 2000–19.

### Debt sustainability and fiscal implications
- Sovereign debt to GDP in advanced economies is projected to rise by 20 percentage points to about 125 percent of GDP by end-2021.
- Sovereign debt to GDP in EMDEs is projected to rise by more than 10 percentage points to about 65 percent of GDP by end-2021.
- Low interest rates mitigate debt service costs mainly for advanced economies with a large fraction of negative-yielding sovereign bonds.
- The ratio of sovereign debt service to tax revenue is anticipated to increase for several emerging markets and low-income countries, meaning less revenue available for critical spending (social spending, poverty alleviation, human capital recovery).

### Poverty, inequality, and human capital
- The pandemic will reverse progress since the 1990s in reducing global poverty.
- People relying on daily wage labor and outside formal safety nets experienced sudden income losses with mobility restrictions.
- Higher population growth and low starting income levels imply that the contraction among low-income developing countries will take a very heavy toll on living standards, especially for the poor.

*Source: IMF staff estimates (October 2020 World Economic Outlook chapter).*

### 2. Emerging Markets

### 2. Emerging Markets

### Poverty, Inequality, and Labor Market Impacts
- Close to 90 million people could fall below the $1.90 a day income threshold of extreme deprivation this year.
- The pandemic is having particularly adverse effects on economically more vulnerable people, including younger workers and women.
- Workers most affected are employed in accommodation and food services, transportation, retail, and wholesale.
- Younger workers, those in less secure work arrangements, and those employed in small and medium enterprises appear more vulnerable to layoffs.
- In general, low-wage earners are at an appreciably higher risk of losing their jobs than those in upper quintiles of the wage distribution.
- In emerging market and developing economies, informally employed workers are more likely to become unemployed than those with formal contracts.
- Entering the COVID-19 pandemic, income inequality had risen significantly compared with the early 1990s in many advanced economies and among some fast-growing emerging market and developing economies.

### Human Capital Accumulation and School Closures
- UNESCO (2020) estimates that more than 1.6 billion learners worldwide have been affected by school and university closures.
- School closures reduce learning opportunities and exacerbate gaps in childcare, limiting parents’ ability to work, particularly mothers.
- Evidence suggests that the loss of learning increases with the duration of interruption.
- Online and distance learning can act as a temporary bridge, but are not an effective substitute.
- School closures exacerbate divisions in access to nutrition and safe environments; closures may result in greater food insecurity and poorer nutrition for children from low-income households.
- Past evidence links school closures to earlier marriages, children forced into militias, sexual exploitation, teen pregnancies, and child labor in some countries.
- Absent actions to regain lost human capital, lower lifetime schooling is associated with lower lifetime income and interrupted schooling is associated with lower earnings trajectories.

### Inflation Outlook
- Inflation in the advanced economy group is projected at 0.8 percent in 2020, rising to 1.6 percent in 2021, and broadly stabilizing thereafter at 1.9 percent.
- Inflation in the emerging market and developing economy group is projected at 5 percent this year, declining to 4.7 percent next year, and moderating thereafter to 4 percent over the medium term.
- Competing forces will shape price developments: upward pressures from pent-up demand, higher production costs from persistent supply disruptions, and potential fiscal dominance; downward pressures from precautionary saving, transfers of purchasing power to lenders with lower propensities to spend, and limits to monetary policy’s ability to stimulate demand.
- The decline in inflation during the pandemic appears broad-based across cyclical sectors (furnishing, housing excluding energy, recreation, restaurants, and hotels) and noncyclical sectors (clothing and footwear, communications, education, health, transportation services, and miscellaneous goods and services).
- Market participants generally expect subdued inflation in advanced economies; among emerging market economies, inflation expectations remain relatively low compared with historical averages.

### Trade, External Balances, and Remittances
- Global trade is expected to contract by over 10 percent this year.
- Trade volumes are expected to grow by about 8 percent in 2021 and by slightly more than 4 percent, on average, in subsequent years.
- The contraction in 2020 reflects a particularly sharp contraction in contact-intensive sectors with much smaller trade intensity than manufacturing, and weak final demand from consumers and firms in the synchronized global downturn.
- Tourism-dependent economies face a particularly bleak trade outlook due to restrictions on international travel and consumers’ fear of contagion; countries where tourism and travel account for a larger share of GDP are projected to suffer larger declines in activity during 2020–21 compared with pre-COVID-19 forecasts.
- Oil exporters have suffered a severe terms-of-trade shock with the decline in oil prices and face a more difficult external outlook.
- Remittance flows contracted sharply during the early lockdown period but have shown signs of recovery; risk of a decline in payments and transfers from migrant workers back to their home countries is significant, particularly for Bangladesh, Egypt, Guatemala, Pakistan, the Philippines, and countries in sub-Saharan Africa more broadly.
- Global current account deficits and surpluses are projected to shrink in 2020 to the lowest level in the past two decades and to remain broadly stable thereafter; creditor surpluses are projected to decline in east Asia and to a lesser extent in Germany and the Netherlands, while the surplus in oil exporters is projected to turn into a modest deficit.

### Risks, Scenarios, and Policy Implications
- Fundamental uncertainty about the evolution of the pandemic makes quantitative assessment of risks difficult.
- Upside scenarios noted:
  - The recession could be less severe if economic normalization proceeds faster than expected without rekindling infections.
  - Extensions of fiscal countermeasures (the current forecast factors in only measures implemented and announced so far) would lift global growth above the projected baseline in 2021.
  - Faster productivity growth could be engendered by changes in production, distribution, and payment systems.
- Policy-makers will need to confront elevated debt, more poverty, higher inequality, and severe setbacks to human capital accumulation while managing the outlook for inflation and trade.

*Source: International Monetary Fund | October 2020 — Chapter 1, Section 2.*

### 1. Global Current Account Balance

### 1. Global Current Account Balance

### Upside risks and scenarios
- Extensions of fiscal countermeasures represent an upside risk to global growth.
- Advances in medical therapies, data-enabled services, and remote working could speed return to pre-pandemic activity in some sectors.
- Production and global distribution at affordable prices of a safe, effective vaccine would lift sentiment and yield better growth outcomes than in the baseline, including a fuller recovery in contact-intensive sectors and travel.
- Scenario Box 1 presents growth projections under alternative scenarios (referenced).

### Downside risks (listed in source)
- Recurring outbreaks, slower-than-anticipated progress on treatments and vaccines, or unequal access could lower activity and trigger renewed social distancing and tighter lockdowns; cross-border spillovers from weaker external demand could magnify the impact.
- Premature withdrawal of policy support or poor targeting could dissolve viable economic relationships and exacerbate misallocation.
- Financial conditions may tighten again, exposing vulnerabilities; a sudden stop in new lending (or failure to roll over existing debt) would tip some economies into debt crises and slow activity further.
- Liquidity shortfalls and insolvencies: deep recessions cause revenue losses while firms still meet payroll, fixed costs, and debt service; prolonged shortfalls can lead to bankruptcies and firm closures. Corporate bond defaults are at their highest since the global financial crisis (June 2020 GFSR Update). Aggressive policy countermeasures have likely prevented even more widespread bankruptcies, but risk of wider firm bankruptcies is tangible.
- Intensifying social unrest: instances increased globally in 2019 then declined early in the pandemic; protests in June increased in the United States and spread worldwide; longer-lived protests could hurt sentiment and complicate reform efforts.
- Geopolitical tensions could flare up again; frayed ties among OPEC+ pose risks for global oil supply. A renewed plunge in prices as seen in March would severely hurt activity in oil exporters.
- Trade policy uncertainty and technology frictions: Phase One deal between the United States and China reaffirmed, but tensions remain elevated; the United Kingdom’s transitional arrangement with the European Union expires on December 31, 2020—failure to agree could raise trade barriers; distortionary tariff and nontariff barriers instituted over the past two years largely remain in place.
- Weather-related natural disasters: increased frequency and intensity of tropical storms, floods, heat waves, droughts, and wildfires with humanitarian tolls and persistent effects; climate change contributes to more frequent/intense events and can cause cross-border migration and financial stress.

### Near-term policy priorities
- Immediate dual priority: ensure adequate resources for health care systems and limit the economic damage.
- A sizable and aggressive economic policy response is already under way in several countries; the longer the crisis persists, the greater the fiscal demands on governments (health care spending, unemployment benefits, cash transfers, countercyclical initiatives).
- Where fiscal rules constrain action, temporary suspension of the rules would be warranted, combined with a commitment to a gradual consolidation path after the crisis abates to restore compliance over the medium term.
- Create room for immediate spending needs by prioritizing crisis countermeasures and reducing wasteful and poorly targeted subsidies.
- Prudent debt management—extending maturities on government borrowing and locking in low interest rates to the extent possible—can save debt service expenses and free up resources for crisis mitigation.

### Difficult trade-offs and medium-term challenges
- Policymakers must combat the near-term recession while addressing challenges to place economies on a path of higher productivity growth, ensuring gains are shared evenly and debt remains sustainable.
- Near-term support should be designed to further broader objectives: lift potential output, ensure participatory growth, and protect the vulnerable.
- Preferential fiscal measures:
  - Investments in health, education, and high-return infrastructure that also help move the economy to lower carbon dependence.
  - Research spending to facilitate innovation and technology adoption.
  - Safeguarding critical social spending to protect vulnerable groups with higher propensities to spend disposable income.
- Adhere to the highest standards of debt transparency to avoid future rollover difficulties and higher sovereign risk premiums.

### Enhancing multilateral cooperation
- National health efforts should be supplemented with extensive multilateral cooperation.
- Key priorities:
  - Fund advance purchase commitments of vaccines undergoing trials to encourage rapid scaling up of manufacture and worldwide distribution at affordable prices (examples include Coalition for Epidemic Preparedness Innovations and Gavi, the Vaccine Alliance — referenced).
  - Support countries with limited health care capacity through medical assistance and removal of trade restrictions on essential medical supplies; share information on the pandemic and the search for vaccines and therapies.
- Financial support for constrained countries:
  - Emerging market and developing economies—low-income countries in particular—require debt relief, grants, and concessional financing.
  - Build on the Group of Twenty initiative for a temporary standstill on official debt service payments by low-income countries; private creditors should extend similar treatment so countries can conserve liquidity and direct resources to priority health care spending and relief measures.
  - Where debt restructuring is needed, all creditors and borrowers should quickly agree on mutually acceptable terms.
  - The global financial safety net can help countries facing external funding shortfalls.
- IMF response highlights:
  - Expanded lending toolkit to include a renewable and replenishable credit line for members with strong policy frameworks and fundamentals.
  - Provided new financing through other lending facilities.
  - Temporarily increased access limits to its emergency financing facilities.
  - Improved ability to provide grant-based debt service relief.

### National-level policy design recommendations
- Tax and spending measures should privilege initiatives that lift potential output, ensure participatory growth, and protect the vulnerable.
- Additional debt incurred to finance such initiatives is more likely to pay for itself by increasing the overall size of the economy and future tax base than borrowing for ill-targeted subsidies or wasteful current spending.
- Although instituting new revenue measures during the crisis will be difficult, governments may need to consider raising progressive taxes on more affluent individuals and those relatively less affected by the crisis (including increasing tax rates on higher income brackets, high-end property, capital gains, and wealth) as well as changes to corporate taxation to ensure firms pay taxes commensurate with profits (text concludes mid-sentence in source).

### Key figures and numeric references (as presented in source)
- Figures referenced: Figure 1.20 (Fiscal Stance, 2019–21), Figure 1.21 (Geopolitical Risk Index), Figure 1.22 (Share of World Imports Affected by Countries’ Own Import Restrictions), Figure 1.23 (Policy Uncertainty and Trade Tensions), Figure 1.24 (Output Gap Projections, 2020–23).
- Time markers and dates: 2019–21; April 2020 World Economic Outlook; June (referenced for corporate bond defaults and social unrest); December 31, 2020; July 1 (trade agreement between Canada, Mexico, and the United States came into force on July 1); Jan. 2016–Aug. 20 (policy uncertainty chart time axis); 2020–21 and 2022–23 averages noted in Figure 1.23 caption.
- Index baselines: Mean GEPU from 1997 to 2015 = 100; mean US trade policy uncertainty index from 1985 to 2010 = 100.
- Output gap chart scale includes values from –9 to 0 (percent) with ISO country codes listed (ESP, ITA, FRA, GBR, AUS, DEU, CAN, JPN, USA, IND, ZAF, MEX, BRA, IDN, TUR, CHN, RUS, POL).

*Source: Chapter 1, "Global Prospects and Policies", World Economic Outlook, International Monetary Fund | October 2020.*

### CHAPTER 1

### CHAPTER 1
 gLOBAL PROsPECTs AND POLICIEs

### Health care resources and immediate public health priorities
- With the pandemic continuing to spread, all countries need to ensure that their health care systems can cope with the elevated demand for their services.
- Priorities include securing adequate resources and prioritizing health care spending as needed, including on testing; contact tracing; personal protective equipment; life-saving equipment, such as ventilators; and facilities such as emergency rooms, intensive care units, and isolation wards.

### Policies to limit economic damage where the pandemic is accelerating
- Foremost priority in countries with rising infections is to slow transmission; lockdowns are effective in bringing down infections and pave the way for eventual economic recovery.
- Economic policy countermeasures should cushion income losses for people and firms:
  - Targeted temporary tax breaks for affected people and firms.
  - Wage subsidies for furloughed workers.
  - Cash transfers.
  - Allowances for postponements of financial payments.
  - Paid sick and family leave.
  - Expanded eligibility criteria for unemployment insurance and better coverage of self-employed workers.
  - Temporary credit guarantees and loan restructuring to help solvent-but-illiquid firms remain afloat.
- Retraining and reskilling should be pursued so workers can look for jobs in other sectors; displaced workers will need extended income support during transitions.
- Broad-based monetary, financial regulatory, and fiscal responses can help prevent deeper and longer-lasting downturns:
  - Boost credit provision through central bank liquidity support and targeted relending facilities.
  - Regulatory actions to temporarily ease loan classification standards and provisioning requirements.
  - Central bank policy rate cuts where interest rates are not already at their effective lower bound; asset purchases and forward guidance where rates are at that limit.
  - For emerging market central banks launching asset purchases, clearly communicate objectives and consistency with price stability to mitigate risks of perceived fiscal dominance, inflation, and capital flight.
  - Fiscal stimulus through public infrastructure investment or across-the-board tax cuts (where financing constraints permit) to support confidence, protect corporate cash flow, and limit bankruptcies.
- Policy responses must avoid locking people and inputs into sectors unlikely to return to pre-pandemic vitality while supporting the vulnerable.

### Supporting the recovery where reopening is under way
- As countries reopen, policies must support recovery by gradually removing targeted support, facilitating reallocation to sectors less affected by social distancing, and providing stimulus where possible.
- Unwinding lifelines should be calibrated to the pace of the recovery:
  - Wage subsidies, cash transfers, enhanced unemployment benefits, and credit guarantees should start to be removed only after activity picks up durably.
  - In economies with large shares of self-employed and significant informality, cash and in-kind transfers to households may need to continue for longer.
  - In economies where medium and large enterprises account for a large share of employment, credit guarantees, liquidity support, and wage subsidies may need to be maintained.
- Redeploy freed fiscal resources to public investment:
  - Examples include investments in renewable energy, improvements in the efficiency of power transmission, and retrofitting buildings to reduce their carbon footprint.
- As lifelines are unwound, social spending should be expanded to protect the most vulnerable (for example, paid and family sick leave, expanded eligibility for unemployment insurance, strengthened health care benefit coverage).
- Complementary labor market measures:
  - Hiring subsidies and additional spending on retraining, coupled with income support for displaced workers.
  - Measures to reduce labor market rigidities that deter firms from hiring.
  - Balance sheet repair is an important part of reallocation.
- Monetary policy role:
  - Where inflation expectations are anchored, accommodative monetary policy can ensure borrowing costs remain low and credit conditions supportive.
  - Relatively low medium-term inflation prospects suggest central banks have room to allow recovery to take root before exiting current settings.

### Limiting the damage in countries with large informal sectors
- Many relief measures rely on well-established tax registries and access to bank accounts, which are often missing in economies with large informal employment shares.
- Delivery channels for relief in such countries:
  - Digital payment systems (example cases cited in source: Benin and Côte d’Ivoire).
  - Centralized databases with assigned identification numbers to provide targeted assistance (example case cited: Togo).
  - Workarounds where individuals lack mobile phones or identification numbers: in-kind support of food, medicine, and other essentials delivered through local governments, community organizations, and specialized stores that stock subsidized goods.
- Strengthen mechanisms for automatic, timely, and temporary support in downturns:
  - Rules-based fiscal stimulus triggered by deteriorating macroeconomic conditions—such as temporary targeted cash transfers to liquidity-constrained low-income households that activate when unemployment or jobless claims rise above a certain threshold—can help dampen downturns.

### Policies to address medium- and long-term challenges
- The pandemic is a transformational event with damages to supply potential, a buildup of debt, and implications for inequality and human capital accumulation.
- Policy priorities discussed below aim to address these structural challenges.

#### Catalyzing stronger, environmentally sustainable growth
- Productivity growth had already slowed across both advanced and emerging market and developing economies in the 15 years before the pandemic.
- Damage to supply potential reflects continuation of preexisting forces: relatively slow investment growth, more modest improvements in human capital, and slower efficiency gains in combining technology with available factors of production, partly reflecting sectoral mismatches.
- Policy initiatives to counteract these forces:
  - Repairing balance sheets and disposing of distressed debt to allow investment to recover.
  - Addressing labor market rigidities and reducing barriers to entry that hamper redeployment to growing sectors.
  - Competition policy frameworks and scrutiny of corporate mergers to prevent abuses of market power and maintain a level playing field for start-ups.
- Facilitating new growth opportunities and a low-carbon transition:
  - A green investment push to increase renewables, improve grid efficiency, and retrofit buildings can spur capital spending and accelerate transition to a lower-carbon growth path.
  - Examples include the European Union’s decision to target 30 percent of the Next Generation recovery fund to climate-change-related spending.
  - Emerging growth clusters: accelerated shift to e-commerce and digitalization; medicine and biotechnology.

#### Boosting human capital accumulation
- Global loss of learning as schools and universities stay closed for a large part of 2020 is likely to be an enduring legacy.
- Virtual learning may not be an adequate substitute even in locations with widespread high-speed internet and home supplementary instruction.
- Policy responses for makeup strategies once safe to resume full-time schooling:
  - Set aside funding to accommodate adjustments to the length of the school year.
  - Train teachers on remedial approaches to correct learning losses.
  - Institute or expand supplementary after-school tutoring programs.
- Educational and vocational programs must accommodate training needs for jobs likely to be in high demand (emergency first responders, nurses, lab technicians, and digital literacy more broadly).
- Even with adaptations, take-up of substantially different and challenging training may fall short, raising the possibility of persistent increases in dropouts and large numbers of people in neither education, employment, nor training.

#### Making gains more equitable
- The setback to human capital accumulation is a dimension along which inequality is likely to increase as a result of the pandemic.
- Social spending measures beyond education to counter increased inequality:
  - Strengthening social assistance (for example, conditional cash transfers, food stamps and in-kind nutrition, medical payments for low-income households).
  - Expanding social insurance (relaxing eligibility criteria for unemployment insurance, extending coverage of paid family and sick leave).
  - Investments in retraining and reskilling programs to boost reemployment prospects for displaced workers.

#### Resolving debt overhangs
- Elevated debt levels entering the crisis are set to rise further, limiting scope for actions to boost productivity, accelerate the low-carbon transition, and reduce inequality.

- Sovereign debt overhang:
  - Governments with large debt stocks will need to consider options to raise revenues and gradually decrease expenditures over the medium term.
  - Revenue measures include increasing progressivity in the tax code, reducing corporate tax breaks, applying tighter caps on personal income tax deductions, instituting value-added taxes where not present, and improving coverage of tax registries and electronic filing.
  - Spending-side measures include scaling back poorly targeted and wasteful subsidies.
  - In some cases, sovereign debt restructuring may be needed to alleviate financing pressures and restore debt sustainability; restructuring options could include maturity extensions, interest rate reductions, principal reductions (haircuts), and other debt swaps (with renegotiated terms).
  - Where available, collective action clauses may need to be activated to speed up the process.

- Corporate debt overhang:
  - Triaging business cases into viable (and restructurable) versus unviable firms is the first step.
  - For systemically important firms, equity injections may be considered.
  - For viable firms, restructure balance sheets and provide liquidity support; strengthen or establish special out-of-court restructuring frameworks.
  - Use standardized restructuring solutions and incentives (deadlines for agreements, fines for creditors, threat of liquidation to debtors) to expedite restructuring.
  - Supervisors should enhance regulatory oversight to handle a potential rise in nonperforming loans (for example, through more robust provisioning, write-offs, and income recognition); banks should strengthen internal nonperforming loan management capabilities.
  - Support development of distressed debt markets by increasing access to debtor information, removing regulatory barriers (for example, enabling nonbanks to own and manage nonperforming loans), and improving collateral valuation quality.
  - Amend tax rules that inhibit debt restructurings or write-offs.
- Scale of COVID-19 shock argues for more ample solvency support than usual, except for firms already insolvent before the crisis began:
  - Tax measures, such as loss carrybacks, could help support previously viable firms.
  - For large firms, support can take the form of direct equity injections or junior debt claims with warrants.
  - For unlisted small and medium enterprises, support could involve grants today that are partially recovered by a temporarily higher corporate tax rate in future.
  - Where firms are unviable due to long-lived structural shifts, liquidation to enable reallocation of capital and labor may be needed; efficient and equitable corporate bankruptcy frameworks are essential.

### Multilateral policies to ensure a sustained global recovery
- Intensifying trade and technology tensions between countries could drag global growth starkly lower than the baseline projection.

*International Monetary Fund | October 2020*

### CHAPTER 1

### CHAPTER 1

### Alternative COVID-19 Evolution Scenarios (G20 Model)
- Two alternative paths for the evolution of the fight against COVID-19 are simulated with the G20 Model: a downside scenario (containment proves more difficult) and an upside scenario (all dimensions go well).
- Downside scenario assumptions and channels:
  - Measures to contain spread slightly increase the direct drag on activity in the second half of 2020.
  - Slower progress in 2021 on vaccines, treatments, and adherence to social distancing.
  - Deterioration in contact-intensive sectors with income spillovers to other sectors and amplification via trade.
  - Financial conditions tighten: corporate spreads rise in advanced economies; corporate and sovereign spreads widen in emerging market economies.
  - Fiscal response: advanced economies increase transfers beyond automatic stabilizers; emerging market economies limited to automatic stabilizers.
  - Monetary authorities in advanced economies with constrained conventional space use unconventional measures to contain long-term interest rates.
  - Protracted weakness creates scarring: loss in productive capital, persistent rise in the natural rate of unemployment, and temporarily weaker productivity growth felt in 2022 and beyond.
- Downside scenario quantitative impacts (relative to the baseline):
  - Global growth in 2020 is roughly ¾ percentage point weaker.
  - Global growth in 2021 is almost 3 percentage points weaker.
  - After 2021 growth rises above baseline for several years, but the level of global GDP is still roughly 1.5 percent below baseline by 2025.
  - The negative impact on the level of GDP is roughly twice as large for emerging market economies as for advanced economies.
  - Debt-to-GDP ratios rise by well above 10 percentage points, on average, for advanced economies by 2022.
  - Debt-to-GDP ratios rise by 5 percentage points for emerging market economies by 2022.
- Upside scenario assumptions and channels:
  - Advances on treatments reduce fatality rates quickly, restoring confidence.
  - Early and substantial ramp-up in vaccine production and cooperation in global supply chains lead to earlier, widespread vaccine availability.
  - Complete openness and transparency increase confidence in vaccine efficacy and safety, leading to widespread vaccinations.
  - Faster rebound in contact-intensive sectors and higher spending across sectors as uncertainty subsides.
  - Easing in risk premiums, fewer bankruptcies, less labor market dislocation, and milder slowing in productivity growth than in the baseline; supply-side improvements begin in 2023 and grow.
  - Policy: fiscal withdrawal limited to automatic stabilizers; monetary authorities accommodate faster growth without imperiling price stability objectives.
- Upside scenario quantitative impacts (relative to the baseline):
  - Global growth is roughly ½ percentage point higher in 2021.
  - Global growth is roughly 1 percentage point higher by 2023.
  - In 2024 the pickup moderates, with growth slightly below baseline by 2025.
  - By 2025 the level of global GDP is roughly 2 percent above the baseline.
  - The improvement in emerging market economies is almost double that in advanced economies.
  - Debt-to-GDP ratios fall by roughly 5 percentage points for both advanced and emerging market economies by the end of the World Economic Outlook horizon.

*The authors of the scenario box are Ben Hunt and Susanna Mursula.*

### Revised Purchasing-Power-Parity (PPP) Weights and Aggregation Effects (ICP 2017)
- ICP 2017 released new PPPs for the reference year 2017 (and revised 2011 results and annual PPP estimates for 2012–16) for 176 participating economies; these PPPs are used to convert currencies and equalize purchasing power relative to the base economy (the United States).
- Key changes in world GDP shares and weights:
  - The share of emerging market and developing economies in world GDP rises, while that of advanced economies falls during 2011–19 based on ICP 2017, as was the case with ICP 2011; focus here is on weight revisions for a given year.
  - The share of the global economy for 2019 for advanced economies is now estimated at 43 percent—higher than the previous calculation of 40 percent.
  - Euro area countries and the United States are estimated to have higher shares in 2019 than before.
  - Revisions for China and India together mostly account for the smaller shares of emerging Asia and emerging market and developing economies as a whole in the new weights.
  - Latin America and the Caribbean and emerging Europe have a slightly larger global weight, while the Middle East and Central Asia region has a smaller global weight.
  - The weight of sub-Saharan Africa is virtually unchanged.
- China-specific revision:
  - China’s 2019 PPP share using ICP 2017 is 17.4 percent compared with the share estimated using ICP 2011 of 19.2 percent.
  - The PPP conversion rate implication: the relative price level in China in 2019 is now higher under ICP 2017, so GDP converted at the PPP rate is smaller.
- Impact on aggregate growth and WEO aggregates (comparison of June 2020 WEO Update aggregations based on ICP 2011 versus ICP 2017):
  - Average global growth is estimated at 3.2 percent for 2018–19 and 3.6 percent for 2011–17 using ICP 2017, some 0.1 percentage point lower than with the old weights.
  - Aggregation of the June 2020 WEO Update country forecasts with the new weights yields an aggregate global growth rate projection of –5.2 percent for 2020 (compared with the projection of –4.9 percent in the June 2020 WEO Update, which used the old weights).
  - The reduction in the relative weight of fast-growing emerging Asia implies slightly lower average growth for emerging market and developing economies using the ICP 2017 weights compared with ICP 2011 weights.

*The authors of the PPP box are Jungjin Lee and Evgenia Pugacheva, with contributions from Angela Espiritu and Mahnaz Hemmati.*

*International Monetary Fund | October 2020*

### Box 1.1 (continued)

### Box 1.1 (continued)

### Overview
- This box documents possible implications of the pandemic for poverty reduction, improvements in life expectancy, and progress toward greater equality in emerging market and developing economies.
- Key high-level points from the text:
  - Emerging market and developing economies grew by 4.1 percent on average in the two decades prior to the COVID-19 crisis.
  - Per capita growth was 2.4 percent in 2000–19 versus 1.0 percent in 1980–99.
  - With the pandemic, real GDP in emerging market and developing economies is expected to decline by 3.3 percent in 2020.
  - The crisis disproportionately affects vulnerable workers and risks reversing prior progress on inclusiveness.

### Progress on inclusiveness prior to the pandemic
- Poverty reduction and health improvements:
  - The share of people living on less than $1.90 a day (in 2011 purchasing-power-parity terms) declined from 25 percent in 2002 to 12 percent in 2018, on average.
  - The poverty gap index indicates the average annual money transfer per person living in poverty necessary to end extreme poverty declined from $240 to $184 (for perfectly targeted transfers).
  - Life expectancy exhibited strong “convergence,” with levels substantially increased for almost all emerging market and developing economies, and especially for countries with lower life expectancy.
  - Other health indicators that improved include mortality under age five, maternal mortality, and access to clean water.
- Inequality and other inclusiveness dimensions:
  - The Gini coefficient declined only gradually, by 3 percentage points—from 44 to 41, on average—during 2002–18.
  - The Palma ratio indicates the total income of the top 10 percent is twice as large as the total income of the bottom 40 percent in emerging market and developing economies, whereas the difference is only 25 percent for advanced economies, on average.
  - The share of inactive youth (youth not in education nor in employment) has hovered around 20 percent.
  - Inequality in education (distribution of years of schooling within a country) has only marginally declined.
  - Gender gaps remain high in labor force participation; female educational attainment remains lower than male attainment in most of these economies, especially in low-income countries.

### Impact of the pandemic on inclusiveness
- Poverty and life expectancy:
  - The World Bank estimates the COVID-19 pandemic will increase the global share of people living on less than $1.90 a day by 1.14 percentage points, which represents almost 90 million people newly living in extreme poverty—the first increase since 1998.
  - The COVID-19 impact on life expectancy is currently projected to be moderate, but downside risks stem from fragile health care systems and interruptions in treatments for HIV, malaria, and tuberculosis.
- Inequality and gender:
  - Income inequality widened during past pandemics, especially over the medium term.
  - The COVID-19 crisis is expected to have a larger impact on inequality because containment measures disproportionately affect the most vulnerable.
  - Gender equality is being undermined and could experience a sharp setback under current circumstances.
- Telework ability and distributional effects:
  - Lower telework ability for lower-paying jobs suggests a strong setback in progress on income inequality since the global financial crisis.
  - Brussevich, Dabla-Norris, and Khalid (2020) estimate telework ability across 35 economies and find it is generally lower for low-income earners than high-income earners.
  - Using a parsimonious distribution of the aggregate income shock (based on the IMF’s real GDP projections) in proportion to telework ability across income quintiles yields an estimated average increase in the Gini coefficient for emerging market and developing economies of 2.6 percentage points to 42.7 in 2020.
  - That estimated level is broadly comparable to the Gini level in 2008, implying gains since the global financial crisis could be reversed.

### Welfare measure beyond GDP and projected losses
- Welfare measure (Jones and Klenow 2016) accounts for:
  1. real consumption per capita,
  2. life expectancy,
  3. leisure time, and
  4. consumption inequality.
- Findings:
  - The average welfare improvement in 56 emerging market and developing economies from 2002 to 2019 was equivalent to a 6 percent increase in annual consumption levels in every year.
  - This exceeded per capita real GDP growth in the same period by 1.3 percentage points, with the excess welfare growth stemming almost entirely from longer life expectancy.
  - A setback in welfare in 2020 could exceed 8 percent, driven in large part by the excess change in inequality under parsimonious estimates.

### Small and medium enterprises (SMEs): liquidity and solvency risks
- SMEs are particularly vulnerable due to limited buffers and access to credit, and they are concentrated in hardest-hit sectors (restaurants, hotels, arts and entertainment).
- Methodology summary:
  - Analysis builds on Gourinchas and others (2020) using Orbis data for SMEs across 21 (mostly advanced) economies.
  - Liquidity risk: whether a firm has enough cash at the end of 2020 to cover operational and financial expenses, assuming roll-over of maturing debt but no new debt.
  - Insolvency risk: whether a firm’s net equity is projected to become negative at the end of 2020.
- Key statistics:
  - Firms in distress account for 9 to 13 percent of total SME (in sample) employment, depending on the stress measure chosen—insolvency or illiquidity.
  - This represents almost a doubling of SME jobs at risk due to liquidity risks (and a 50 percent increase due to insolvency risks) versus a scenario without COVID-19.
  - Using illiquidity as a distress measure, the share of jobs at risk climbs to 30 percent for “arts and entertainment” and 40 percent for “food and accommodation.”
- Policy implication:
  - Liquidity and solvency risks for SMEs imply rising bankruptcy risks; targeted redistribution policies and measures to support affected people and firms are essential to mitigate sizable adverse impacts on inequality and welfare.

*Source: Box 1.1 (continued), Chapter 1, World Economic Outlook: A Long and Difficult Ascent, International Monetary Fund | October 2020.*

### 1. Share of SME Jobs at Risk, by Scenario

### 1. Share of SME Jobs at Risk, by Scenario

### Rising SME insolvency risks and government support rationale
- The magnitude of the shock, uncertainty about its duration, and macro-financial amplifiers associated with mass bankruptcies justify ampler-than-usual recourse to solvency support, over and above liquidity provision and reductions in bankruptcy legal/financial costs.
- Standard advice: provide liquidity to illiquid but solvent firms; restructure insolvent firms to facilitate swift resource reallocation. This crisis calls for broader solvency support given the scale of risks.

### Illustrative policy scenarios and quantitative impacts
- Policy simulation: giving all SMEs 5 percent of their pre-pandemic annual revenues (accounting for more than 4 percent of GDP) as a cash transfer, delivered in two illustrative forms:
  - government loans, and
  - equity(-like) injections.
- Key quantitative outcomes:
  - Only the equity(-like) injections would reduce insolvency risks.
  - Equity(-like) injections would reduce the share of jobs at risk by almost 3 percentage points relative to panel 1 of Figure 1.3.1.
- Footnote: Both types of policy imply a cash transfer of a similar amount and thereby are equally effective at easing liquidity risks.

### Trade-offs, costs, and targeting considerations
- Equity(-like) support benefits:
  - Reduces insolvency risks and job losses (see almost 3 percentage point reduction in jobs at risk).
- Equity(-like) support costs and risks:
  - Greater fiscal risks, particularly if firms default, because equity(-like) claims would be junior to debt claims.
  - Equity-like injections into SMEs may attract not only viable firms but also unviable firms “gambling for resurrection,” increasing fiscal exposure.
- Other trade-offs to balance:
  - Reach versus cost-effectiveness of support.
  - Minimizing unwarranted bankruptcies versus containing fiscal costs.
  - Promoting firm and job preservation versus facilitating efficient resource reallocation.

### Policy recommendations and options
- Extend support to firms for longer and consider equity(-like) interventions—particularly in countries with available fiscal space.
- For larger firms: consider direct equity injections or junior debt claims together with warrants.
- For SMEs: combining grants with a temporarily higher future corporate tax rate could act like an equity injection; such an approach would raise tax administration challenges and would need careful calibration.
- Continue efforts to cut the legal and financial costs of bankruptcy procedures to alleviate risks of overwhelming bankruptcy courts.

### Notes on measurement and aggregation (figure context)
- The bars in the referenced figure measure the change in the share of SME firms with negative equity under three scenarios: no policy intervention (blue bars), government loans (red bars), and equity-like injections (yellow bars).
- Changes are computed by comparing the WEO baseline scenario with COVID-19 to a counterfactual scenario for 2020 without COVID-19.
- Data are aggregated from the firm to the country level using sectoral weights, and across countries using GDP weights.

*Source: Box 1.3, World Economic Outlook, October 2020.*

### 10.4 percent in 2021 due to the effects of heightened

### ch1 - 10.4 percent in 2021 due to the effects of heightened

### Food prices and commodity developments during COVID-19
- IMF food and beverage price index increased by 0.7 percent, reflecting pandemic-induced changes in demand and supply.
- Meat and seafood:
  - Meat price index fell by 7.1 percent from the April baseline.
  - Wholesale pork prices declined by 4.5 percent as several US meat processing facilities closed after employee infections, reducing processing capacity and driving a wedge between wholesale and retail prices.
- Staple crops and other agricultural commodities:
  - Rice price is up by 12.6 percent.
  - Corn prices plummeted by 13.0 percent on ethanol demand destruction, with prices reaching a 10-year low in May.
  - Soybean prices declined by 13.0 percent beginning in February due to ample global supplies, despite China ramping up buying in June under the 2020 US-China trade deal.
- Price projections and risks:
  - Food prices are projected to increase by 0.4 percent year over year in 2020 and then increase 4.3 percent in the year thereafter on tighter supply conditions (meats, for example), in part related to expected delays in the supply chain.
  - Further supply chain disruptions and export restrictions in large food exporters are a significant source of upside risk.
  - Renewed tensions between the United States and China could disrupt food trade and lower US food prices while increasing them in competing exporters.

### Commodity price dynamics (figure highlights)
- Commodity price responses varied across sectors (energy; base metals and raw materials; agriculture; precious metals) and across regions.
- Dark fill: percent change in commodity prices for February–April 2020; light fill: percent change for April–August 2020 (as presented in Figure 1.SF.4).

### Coal: past, present, and future — overview
- Coal accounts for about 44 percent of all CO2 emissions and 72 percent of all power sector emissions.
- The unprecedented drop in electricity demand in 2020 favored renewables over coal and natural gas; in Europe electricity consumption fell by more than 10 percent in April, and the share of coal (fossil fuels) in power generation declined to below 8 (30) percent—a historical low. As electricity demand recovered, use of coal resumed globally.
- Historical role:
  - Coal use surged during the industrial revolution and supported rapid economic growth, industrialization, and urbanization.
  - Coal displaced biomass (wood fuel) and helped reverse excessive deforestation in Europe.
- Mid-20th century decline and later renaissance:
  - Cleaner fossil fuel alternatives (oil, natural gas) displaced coal in many sectors after World War II.
  - A partial reversal in the 1970s and onward was driven by: (1) energy security concerns (oil shocks of the 1970s); (2) growing electrification of end-uses; and (3) fast economic growth in emerging markets (notably China and India).

### Current coal consumption patterns and sectoral composition
- The top five coal-consuming countries (China, India, United States, Russia, Japan) account for 76.7 percent of global coal consumption.
- China accounts for about half of global coal consumption.
- Emerging markets account for 76.8 percent of coal consumption.
- Globally, industry takes about 20 percent of total coal consumption.
- In advanced economies, coal demand is predominantly associated with power generation; electrification trends imply power-generation demand will be increasingly important.

### Coal’s negative externalities: health, environment, and carbon intensity
- Coal-fired thermal power plants emit sulfur dioxide, nitrogen oxide, particulate matter, and mercury, which are hazardous to human health and degrade the environment.
- Historical public-health impact: Great Smog of London (December 5–9, 1952) — UK government medical reports estimate that 4,000 people died as a direct result of the smog and 100,000 more were made ill.
- Emission intensity and climate impact:
  - When burned to generate both heat and electricity, coal is 2.2 times as carbon intense as natural gas—the only realistic fossil fuel alternative in the power sector.
  - Replacing coal with other energy sources decarbonizes the energy system to varying degrees depending on the substitute.
- Policy responses:
  - Europe and the United States rolled out regulations beginning in the 1980s and 1990s to incentivize pollution mitigation technologies (for example, scrubbers).
  - Some countries have gradually steered away from coal toward nuclear, hydropower, natural gas, and renewables.

### How fast and when do countries lessen coal dependence?
- Empirical patterns:
  - Per capita coal consumption has already peaked in 73 out of the 84 countries whose share of coal in total energy consumption at some point crossed 5 percent.
  - Average annual decline across these countries was 2.3 percent between 1971 and 2017.
  - On average it takes 43 years to phase out coal after the peak in coal consumption per capita has been reached.
- Income and energy-mix relationship:
  - The inverse U-shaped relationship between income and the share of coal in the energy mix is supported by analysis: coal attains its maximum share at an income level of $9,600 per capita (that is, when a country reaches upper-middle-income status).
  - Examples from the main specification (1971–2017):
    - Income per capita contributed to reductions in the coal share of 6.4 percentage points in the United States and 5.2 percentage points in Japan.
    - Income per capita contributed to increases of 12.2 percentage points in India.
- Quality ladder hypothesis:
  - As income rises, energy choices shift toward greater efficiency, convenience, lower environmental impact, and safety; biofuels occupy lower rungs, coal/oil/hydro middle rungs, and capital-intensive sources (nuclear, natural gas, renewables) upper rungs.
  - The low marginal cost of operating coal-fired power plants helps explain coal’s role in lower-middle- and upper-middle-income countries despite falling plant-level costs of wind and solar.

### Selected quantitative facts and figures
- Food and agriculture:
  - IMF food and beverage price index increased by 0.7 percent.
  - Meat price index fell by 7.1 percent from the April baseline.
  - Wholesale pork prices declined by 4.5 percent.
  - Rice is up by 12.6 percent.
  - Corn plummeted by 13.0 percent.
  - Soybean prices declined by 13.0 percent.
  - Food prices projected to rise 0.4 percent year over year in 2020 and then 4.3 percent in the year thereafter.
- Coal and energy:
  - Coal contributes about 44 percent of all CO2 emissions and 72 percent of all power sector emissions.
  - Top five coal consumers account for 76.7 percent of global coal consumption.
  - Emerging markets account for 76.8 percent of coal consumption.
  - Globally, industry accounts for about 20 percent of total coal consumption.
  - Average annual decline in coal consumption per capita across peaked countries: 2.3 percent (1971–2017).
  - Average time to phase out coal after peak per capita consumption: 43 years.
  - Coal reaches maximum share at $9,600 per capita income.
  - Coal is 2.2 times as carbon intense as natural gas when burned to generate both heat and electricity.
  - Power generation accounted for about 41 percent of total energy demand in 2017, up from 26 percent in 1971.

*Source: IMF — World Economic Outlook, October 2020 — Special Feature: Commodity Market Developments and Forecasts (chapter content provided).*

### 11.3 percentage points in China.

### ch1 - 11.3 percentage points in China.

### Main findings on coal dependence and drivers
- Energy endowments, such as hydropower and coal reserves, play a quantitatively important role—more so than manufacturing and environmental regulation, for which modest effects are found.
- Harsher winters are associated with higher use of coal.
- A large part of the variation in coal dependence is unexplained, which may reflect political economy factors and strong domestic mining interests in large coal consumer and producer countries, especially in Asia, including China and India.

### Relationship between coal share, coal consumption per capita, and income
- The relationship between the coal share and income is highly nonlinear.
- Coal consumption per capita and income exhibits an S-shape relationship with income per capita:
  - At low income levels, coal consumption growth accelerates.
  - Growth reaches its maximum at the middle income level.
  - Coal consumption per capita then levels off.
- The turning point of absolute coal dependence, after which coal consumption declines, ranges from $35,000 to $39,000.
- The “share (or relative) turning point” occurs before the “per capita (or absolute) turning point.”
  - At middle and high income levels, coal’s share in the energy mix declines as oil, nuclear, and natural gas grow faster.
  - Coal consumption per capita continues to grow after the share turning point, to satisfy fast-growing energy demand.
- Assuming income per capita growth of 4 percent a year, it takes another 33 years to get from the share turning point to the per capita turning point.

### Coal phaseout timing and country examples
- Combining estimates of the average speed of decline and the estimated time interval between the peaks in relative and absolute coal dependence, it takes, on average, 76 years to phase out coal once it reaches its largest share in the energy mix.
- For the United Kingdom, it took almost 100 years to accomplish near elimination of coal usage (Figure 1.SF.10).
- For China, whose coal share peaked in 2013, it implies at least another 38 years of coal consumption under business-as-usual conditions.
- Fastest recent transitions away from coal have been driven by natural gas, at times helped by renewables.

### Recent five-year reductions in coal consumption (selected countries)
- United Kingdom: 2018–12.4 percent reduction; Starting Share 17.0 percent; Mostly Replaced by Natural Gas.
- Israel: 2018–9.4 percent reduction; Starting Share 29.8 percent; Mostly Replaced by Natural Gas.
- Greece: 2018–8.9 percent reduction; Starting Share 29.9 percent; Mostly Replaced by Natural Gas.
- Kazakhstan: 2016–8.1 percent reduction; Starting Share 51.3 percent; Mostly Replaced by Natural Gas.
- Spain: 2010–6.8 percent reduction; Starting Share 12.8 percent; Mostly Replaced by Mixed.
- Australia: 2014–6.5 percent reduction; Starting Share 39.7 percent; Mostly Replaced by Natural Gas.
- Portugal: 2010–6.3 percent reduction; Starting Share 13.5 percent; Mostly Replaced by Natural Gas.
- China: 2017–6.2 percent reduction; Starting Share 69.7 percent; Mostly Replaced by Mixed.
- Denmark: 2018–5.9 percent reduction; Starting Share 15.7 percent; Mostly Replaced by Biofuel.
- Ukraine: 2017–5.8 percent reduction; Starting Share 35.8 percent; Mostly Replaced by Nuclear.
- United States: 2018–5.3 percent reduction; Starting Share 19.6 percent; Mostly Replaced by Natural Gas.

### Costs and competitiveness
- Figure 1.SF.11 (Levelized Cost of Electricity for New Investment, 2019) indicates renewables and gas combined cycle are frequently cost-competitive versus coal; the yellow bar represents the midpoint of the marginal cost of operating an existing coal power plant.
- Renewables’ marginal costs are extremely low; natural gas and coal accounted for most of the decline in electricity generation during the COVID-19 pandemic.

### COVID-19 impacts and outlook
- The COVID-19 pandemic led to a sharp reduction in coal consumption in many coal consumer countries.
- In some regions, record-high renewables shares in electricity production were observed.
- Downward pressure on natural gas prices was even stronger than on coal, in part because of lack of storage for natural gas.
- Where electricity demand recovered, coal usage resumed.
- Unclear net medium-term impact:
  - If reduction in electricity demand is more permanent, utilization of existing coal-fired plants could decline, encouraging closures, especially in advanced economies.
  - In emerging markets, expected strong growth in electricity demand and possible reductions in coal prices and wholesale electricity prices may slow investment in renewables, benefiting coal absent policy intervention.

### Structural reasons for coal persistence
- Industrial use of coal is hard to replace and represents 33 percent of coal consumption in emerging markets, where most industrial sector coal usage is concentrated.
- Coal-fired power plants are long-lived assets with a minimum design lifespan of 30–40 years, making obsolescence rates of recently built plants very low without large changes in levelized cost of electricity for renewables or policy intervention.

### Policy implications and recommendations
- Decarbonization of power generation would amplify benefits of electric vehicles and broader electrification if electric vehicles are charged with low-carbon electricity.
- Policy actions can accelerate coal decline, as illustrated by the United Kingdom’s experience after introducing a carbon price support at the utility level.
  - In 2013 the United Kingdom introduced a carbon price support—a tax initially set at £9 a metric ton of CO2 and gradually doubled to £18.
- To accelerate decline in coal:
  - Compensate losers from a coal phaseout and use the COVID-19 pandemic as an opportunity to accelerate the transition.
  - In emerging markets, reduce capital constraints to favor investment in renewables.
  - The international community can provide financial and technical assistance to build grids capable of handling intermittent renewables and limit funding of new coal plants where alternatives are available.
- Carbon-capture and storage (CCS) may be viable but is currently expensive to retrofit or deploy absent substantial carbon pricing.
- Diversify and invest in multiple mitigation strategies because intermittency of renewables remains an unresolved problem that may still require coal or natural gas in some locations.

### Energy mix by income group, 2017 (Primary Energy Share, Percent)
- Low-Income Countries:
  - Biomass 80.8, Coal 2.3, Crude Oil 13.3, Natural Gas 0.9, Hydropower 2.8, Renewables 1.6, Nuclear 0.0
- Lower-Middle-Income Countries:
  - Biomass 26.2, Coal 26.9, Crude Oil 26.6, Natural Gas 14.4, Hydropower 1.8, Renewables 2.3, Nuclear 1.8
- Upper-Middle-Income Countries:
  - Biomass 5.2, Coal 40.9, Crude Oil 25.0, Natural Gas 21.5, Hydropower 3.4, Renewables 1.4, Nuclear 2.5
- High-Income Countries:
  - Biomass 5.7, Coal 15.8, Crude Oil 36.6, Natural Gas 29.0, Hydropower 2.1, Renewables 1.6, Nuclear 9.2
- World:
  - Biomass 12.9, Coal 28.0, Crude Oil 29.9, Natural Gas 23.3, Hydropower 2.6, Renewables 1.6, Nuclear 1.6

*Source: IMF staff summary of ch1 - 11.3 percentage points in China.*

### CHAPTER 1

### CHAPTER 1 — GLOBAL PROSPECTS AND POLICIES (Annex tables summary)

### Western Hemisphere: Real GDP, Consumer Prices, Current Account Balance, Unemployment (selected aggregates and notable economies)
- North America (aggregate): Real GDP 2019 1.9, 2020 –4.9, 2021 3.3; Consumer Prices 2019 2.0, 2020 1.6, 2021 2.7; Current Account Balance 2019 –2.1, 2020 –2.0, 2021 –2.0.
- United States: Real GDP 2019 2.2, 2020 –4.3, 2021 3.1; Consumer Prices 2019 1.8, 2020 1.5, 2021 2.8; Current Account Balance 2019 –2.2, 2020 –2.1, 2021 –2.1; Unemployment 2019 3.7, 2020 8.9, 2021 7.3.
- Mexico: Real GDP 2019 –0.3, 2020 –9.0, 2021 3.5; Consumer Prices 2019 3.6, 2020 3.4, 2021 3.3; Current Account Balance 2019 –0.3, 2020 1.2, 2021 –0.1; Unemployment 2019 3.5, 2020 5.2, 2021 5.8.
- Latin America and the Caribbean (memorandum): Real GDP 2019 0.0, 2020 –8.1, 2021 3.6; Consumer Prices 2019 7.7, 2020 6.2, 2021 6.7; Current Account Balance 2019 –1.7, 2020 –0.5, 2021 –0.8.
- Venezuela (noted extremes): Real GDP 2019 –35.0, 2020 –25.0, 2021 –10.0; Consumer Prices 2019 19,906, 2020 6,500, 2021 6,500; Current Account Balance 2019 8.4, 2020 –4.1, 2021 –4.1; Unemployment 2019 47.6, 2020 54.4, 2021 57.3.
- Puerto Rico: Real GDP 2019 2.0, 2020 –7.5, 2021 1.5; Consumer Prices 2019 0.1, 2020 –1.6, 2021 0.6; Unemployment 2019 8.3, 2020 12.0, 2021 11.5.

Notes: Movements in consumer prices shown as annual averages; current account balances are percent of GDP; unemployment rates are percent (national definitions may differ).

### Middle East and Central Asia: Real GDP, Consumer Prices, Current Account Balance, Unemployment (aggregates and notable economies)
- Middle East and Central Asia (aggregate): Real GDP 2019 1.4, 2020 –4.1, 2021 3.0; Consumer Prices 2019 7.8, 2020 9.3, 2021 9.3; Current Account Balance 2019 0.7, 2020 –3.7, 2021 –2.7.
- Oil Exporters (aggregate): Real GDP 2019 0.3, 2020 –6.0, 2021 3.3; Consumer Prices 2019 6.3, 2020 6.3, 2021 7.3; Current Account Balance 2019 2.9, 2020 –3.3, 2021 –2.0.
- Oil Importers (aggregate): Real GDP 2019 3.2, 2020 –1.1, 2021 2.5; Consumer Prices 2019 10.3, 2020 12.4, 2021 11.3; Current Account Balance 2019 –5.8, 2020 –4.5, 2021 –4.7.
- Saudi Arabia: Real GDP 2019 0.3, 2020 –5.4, 2021 3.1; Consumer Prices 2019 –2.1, 2020 3.6, 2021 3.7; Current Account Balance 2019 5.9, 2020 –2.5, 2021 –1.6.
- Iran: Real GDP 2019 –6.5, 2020 –5.0, 2021 3.2; Consumer Prices 2019 41.0, 2020 30.5, 2021 30.0; Current Account Balance 2019 1.1, 2020 –0.5, 2021 0.3; Unemployment 2019 10.7, 2020 12.2, 2021 12.4.
- Lebanon (noted severe deterioration): Real GDP 2019 –6.9, 2020 –25.0; Consumer Prices 2019 . . . , 2020 2.9; Current Account Balance 2019 85.5; Unemployment 2019 –27.4, 2020 –16.3 (data entries show missing/exceptional reporting in some fields).

Memoranda and regional groupings:
- Caucasus and Central Asia: Real GDP 2019 4.8, 2020 –2.1, 2021 3.9.
- Middle East, North Africa, Afghanistan, and Pakistan: Real GDP 2019 0.9, 2020 –4.4, 2021 2.9.
- Middle East and North Africa: Real GDP 2019 0.8, 2020 –5.0, 2021 3.2.

Notes: Consumer prices shown as annual averages; current account balances percent of GDP; unemployment percent.

### Sub-Saharan Africa: Real GDP, Consumer Prices, Current Account Balance, Unemployment (aggregates and country highlights)
- Sub-Saharan Africa (aggregate): Real GDP 2019 3.2, 2020 –3.0, 2021 3.1; Consumer Prices 2019 8.5, 2020 10.6, 2021 7.9; Current Account Balance 2019 –3.6, 2020 –4.8, 2021 –4.1.
- Oil Exporters (aggregate): Real GDP 2019 1.6, 2020 –4.1, 2021 2.0; Consumer Prices 2019 11.7, 2020 13.4, 2021 13.4; Current Account Balance 2019 3.3, 2020 –2.1, 2021 –3.7.
- Nigeria: Real GDP 2019 2.2, 2020 –4.3, 2021 1.7; Consumer Prices 2019 11.4, 2020 12.9, 2021 12.7; Current Account Balance 2019 –3.8, 2020 –3.6, 2021 –2.0.
- Angola: Real GDP 2019 –0.9, 2020 –4.0, 2021 3.2; Consumer Prices 2019 17.1, 2020 21.0, 2021 20.6; Current Account Balance 2019 5.7, 2020 –1.3, 2021 0.1.
- Middle-Income Countries (aggregate): Real GDP 2019 2.2, 2020 –5.1, 2021 3.8.
- Low-Income Countries (aggregate): Real GDP 2019 5.9, 2020 0.1, 2021 3.4.
- Ethiopia (example low-income): Real GDP 2019 9.0, 2020 1.9, 2021 0.0; Consumer Prices 2019 15.8, 2020 20.2, 2021 11.5; Current Account Balance 2019 –5.3, 2020 –4.5, 2021 –4.6.

Notes: Includes country group definitions and list of included countries for aggregates; consumer prices shown as annual averages.

### Summary of World Real per Capita Output (annual percent change; constant 2017 international dollars at PPP)
- World: Average 2002–11 2.4; 2012 1.9; 2013 2.0; 2014 2.1; 2015 2.1; 2016 2.0; 2017 2.6; 2018 2.4; 2019 1.6; 2020 –5.6; 2021 4.0.
- Advanced Economies: 2019 1.3; 2020 –6.2; 2021 3.6.
- United States: 2019 2.4; 2020 –4.7; 2021 2.6.
- Euro Area (sum of individual euro area countries): 2019 1.7; 2020 –8.5; 2021 5.1.
- Emerging Market and Developing Economies: 2019 3.2; 2020 –4.7; 2021 4.8.
- China: 2019 6.3; 2020 –2.7; 2021 7.2.
- India: 2019 5.0; 2020 –11.2; 2021 7.7.
- Emerging and Developing Asia: 2019 5.5; 2020 –2.7; 2021 7.2.
- Latin America and the Caribbean: 2019 0.1; 2020 –1.3; 2021 –9.1; 2021 projection shown as 2.7 (table entries indicate region-level figures across years).
- Sub-Saharan Africa: 2019 0.4; 2020 –5.6; 2021 0.5.
- Low-Income Developing Countries: 2019 2.9; 2020 –3.3; 2021 2.7.

Notes: Table values shown as annual percent change in real per capita output (constant 2017 international dollars at PPP); data for some countries are based on fiscal years.

### Data definitions, notes, and caveats (as provided in the tables)
- Consumer price movements are shown as annual averages. Year-end to year-end changes are available in the Statistical Appendix Tables A5 and A6.
- Current account balances are expressed as percent of GDP.
- Unemployment rates are percent; national definitions of unemployment may differ.
- Data for some countries are based on fiscal years; consult Table F in the Statistical Appendix for economies with exceptional reporting periods.
- Several regional aggregates exclude or include specific economies by definition (examples provided in table notes, e.g., Venezuela excluded from some aggregates; Israel included for geography but excluded from regional aggregates).

*Source: IMF staff estimates (CHAPTER 1 annex tables).*

---


_Source: https://www.imf.org/-/media/files/publications/weo/2020/october/english/ch1.pdf_