## Transcript of April 2020 World Economic Outlook Press Briefing

_IMF News, April 14, 2020_

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## Bibliographic details
- Published: April 14, 2020

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### Global projections and scenarios
- Baseline projection: global growth in 2020 to fall to minus 3 percent.
- Baseline projection: global growth in 2021 to rebound to 5.8 percent.
- Downgrade from January 2020: 6.3 percentage points.
- Cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around $9 trillion.
- Income per capita is projected to shrink for over 170 countries.
- Alternative adverse scenarios:
  - If the pandemic does not recede in the second half of 2020, global GDP could fall an additional 3 percent in 2020.
  - If the health crisis rolls over into 2021, it can reduce the level of global GDP by an additional 8 percent compared to the baseline.

### Severity and historical comparisons
- The IMF describes the shock as "the great lockdown" and "the worst recession since the Great Depression."
- Great Depression contractions cited:
  - Advanced economies: contraction around 16 percent (1929–1932).
  - Global output: contraction about 10 percent (estimates noted).
- Current advanced-economy projection for 2020: minus 6 percent.
- Current emerging market and developing economies projection for 2020: minus 1 percent (and minus 2.2 percent if you exclude China).

### Regional and country-level impacts (key figures and points)
- United States:
  - Projected contraction in 2020: 5.9 percent.
  - Projected growth in 2021: 4.7 percent.
  - Level of economic activity projected to remain below pre-virus trend in 2021.
- China:
  - First-quarter contraction severe; signs of gradual normalization by end-Q1 and into Q2.
  - Projection: poised to register positive growth in 2020, but modest relative to past strong growth rates.
- Euro Area:
  - Projected 2020 outcome worse than many regions due to pre-crisis lower growth, severe epidemic impact, openness to trade, and reliance on tourism.
  - Specific country concerns noted for Italy and Spain given increased debt and vulnerability.
- Brazil and Latin America:
  - Brazil projected to grow 2.9 percent in 2021 (subject to discussion of multiple shocks: commodity price collapse, slowing global growth, domestic epidemic).
  - Latin American challenges: informality and inequality limit policy reach; tourism-dependent economies (e.g., Nepal) face severe hits.
- Oil exporters and MENA / Russia:
  - IMF assumption: oil price around $35 for 2020 and around that level for 2021, then back up to $45.
  - Lower oil prices imply lower fiscal revenues for exporters, risk of drastic reductions in aggregate spending, and negative spillovers to global activity.

### Fiscal, monetary, and financial policy guidance
- Immediate/containment phase:
  - Priority on health measures: flatten the spread via lockdowns, testing, contact tracing; refrain from trade restrictions on medical supplies.
  - Continue large, timely, and targeted fiscal, monetary and financial policies to support households, firms, and financial markets.
  - Support should continue throughout the containment phase to minimize persistent scars from subdued investment and job losses.
- Recovery phase:
  - As containment eases, policies should shift swiftly to supporting demand, incentivizing hiring, and repairing balance sheets in private and public sectors.
  - Fiscal stimulus coordinated across countries with fiscal space will magnify benefits.
  - Moratoria on debt payments and debt restructuring may need continuation during recovery.
- Debt and financing:
  - Debt levels projected to rise significantly over the next 12 months; debt-to-GDP levels expected to stabilize as recovery unfolds, conditional on low interest rates and effective recovery.
  - Some countries will require external aid, debt restructuring, and concessional financing.
  - IMF capacity deployment: actively deploying $1 trillion lending capacity to support vulnerable countries, including rapid-dispersing emergency financing and debt service relief to poorest member countries; call on official creditors to do the same.
- Monetary policy:
  - Data-driven; if inflation remains well below targets, interest rates should stay low to support recovery.

### Social protection, informality, and equity considerations
- Informality and inequality reduce effectiveness of government measures in many emerging and developing economies.
- Recommendations for low-income and highly informal economies:
  - Prioritize health spending.
  - Use cash transfers, digital payment systems where available, and broaden/unconditionalize existing social assistance to reach informal and daily-wage workers.
  - Support small and medium enterprises to preserve capacity for post-pandemic recovery.
  - Call for official creditors to provide debt relief to highly indebted low-income countries.

### Trade, globalization, and medical supplies
- IMF calls on countries to refrain from export restrictions on medical supplies and essential equipment.
- Concern that pandemic-induced travel restrictions, supply-chain breakdowns, and trade limits could foster deglobalization, which would reduce productivity and damage the recovery.

### Uncertainty, risks, and policy flexibility
- Extreme uncertainty around epidemiology, containment effectiveness, development of therapeutics and vaccines, and the interaction of health, financial, and commodity shocks.
- Downside risks currently prevail; upside outcomes possible if treatments/vaccines arrive sooner than expected.
- Policymakers must be large, rapid, and nimble in responses and ready to recalibrate as new data arrives.

*Transcript of April 2020 World Economic Outlook Press Briefing — IMF Communications Department*

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## References

- [Gita Gopinath](https://www.imf.org/en/about/senior-officials/bios/shirin-hamid)
- [Brazil and the IMF](http://www.imf.org/external/country/BRA/index.htm)
- [Chile and the IMF](http://www.imf.org/external/country/CHL/index.htm)
- [Italy and the IMF](http://www.imf.org/external/country/ITA/index.htm)
- [Nepal and the IMF](http://www.imf.org/external/country/NPL/index.htm)
- [Peru and the IMF](http://www.imf.org/external/country/PER/index.htm)
- [Spain and the IMF](http://www.imf.org/external/country/ESP/index.htm)
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_Source: https://www.imf.org/en/news/articles/2020/04/14/tr041420-transcript-of-april-2020-world-economic-outlook-press-briefing_