World Economic Outlook Update, June 2020: A Crisis Like No Other, An Uncertain Recovery

World Economic Outlook, June 2020

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Authors: Gita Gopinath: Reopening from the Great Lockdown: Uneven, Uncertain RecoveryPress ConferenceLoading component...Growth Projections
Published: June 24, 2020

Global growth is projected at –4.9 percent in 2020.
This projection is 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast.
Global growth is projected at 5.4 percent in 2021.
Overall, 2021 GDP would be some 6½ percentage points lower than in the pre-COVID-19 projections of January 2020.
The adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s.
The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast.

There is a higher-than-usual degree of uncertainty around this forecast.
Baseline projection rests on key assumptions about the fallout from the pandemic.
For economies with declining infection rates, the slower recovery path in the updated forecast reflects:
- persistent social distancing into the second half of 2020;
- greater scarring (damage to supply potential) from the larger-than-anticipated hit to activity during the lockdown in the first and second quarters of 2020; and
- a hit to productivity as surviving businesses ramp up necessary workplace safety and hygiene practices.
For economies struggling to control infection rates, a lengthier lockdown will inflict an additional toll on activity.
Forecast assumes that financial conditions—which have eased following the release of the April 2020 WEO—will remain broadly at current levels.
The extent of the recent rebound in financial market sentiment appears disconnected from shifts in underlying economic prospects—as the June 2020 Global Financial Stability Report (GFSR) Update discusses—raising the possibility that financial conditions may tighten more than assumed in the baseline.

All countries—including those that have seemingly passed peaks in infections—should ensure that their health care systems are adequately resourced.
The international community must vastly step up its support of national initiatives, including through:
- financial assistance to countries with limited health care capacity; and
- channeling of funding for vaccine production as trials advance, so that adequate, affordable doses are quickly available to all countries.
Where lockdowns are required:
- economic policy should continue to cushion household income losses with sizable, well-targeted measures; and
- provide support to firms suffering the consequences of mandated restrictions on activity.
Where economies are reopening:
- targeted support should be gradually unwound as the recovery gets underway; and
- policies should provide stimulus to lift demand and ease and incentivize the reallocation of resources away from sectors likely to emerge persistently smaller after the pandemic.

Strong multilateral cooperation remains essential on multiple fronts.
Liquidity assistance is urgently needed for countries confronting health crises and external funding shortfalls, including through debt relief and financing through the global financial safety net.
Policymakers must cooperate to resolve trade and technology tensions that endanger an eventual recovery from the COVID-19 crisis.
Building on the record drop in greenhouse gas emissions during the pandemic, policymakers should both implement their climate change mitigation commitments and work together to scale up equitably designed carbon taxation or equivalent schemes.
The global community must act now to avoid a repeat of this catastrophe by:
- building global stockpiles of essential supplies and protective equipment;
- funding research and supporting public health systems; and
- putting in place effective modalities for delivering relief to the neediest.

World Economic Outlook Update, June 2020

WEO Jun 2020
- WEO Jun 2020 (XLSX)
A crisis like no other, an uncertain recovery: World Economic Outlook Update, June 2020
- A crisis like no other, an uncertain recovery: World Economic Outlook Update, June 2020 (Markdown version)
- A crisis like no other, an uncertain recovery: World Economic Outlook Update, June 2020 (PDF)