COVID-19 Recession: The Global Economy in Crisis

Abstract

In January 2020, the International Monetary Fund (IMF) predicted that the world economy would grow by 3.3% in 2020. However, in its latest forecasts, in April, it predicts a contraction of 3.0%, without growth prospects and with numerous risks. The World bank even forecasts a 3.6% contraction in 2020. These forecasts are already seen as overestimates. Most baseline forecast envisions the deepest global recession since World War II. This study analyzes various economics impacts of the COVID-19 on a global scale. If the global recession expected due to the effects of the coronavirus (COVID-19) would lead to a decline in growth rate of global gross domestic product (GDP) between 2.0% and 10.% in all countries in 2020, the number of unemployed people in the net food importer countries would increase between 14.4 million and 80.3 million; the biggest part of the increase would occur in low-income countries. As the pandemic has shown its most severe impact on the largest world economies, the study considers the developments in United States, Euro Area, Japan and China. The recessions in these parts of the world spreads to the other countries and one should primarily consider these regions. Next we consider the trends in global trades, financial markets, and commodity markets. In association with the four regions of the global economy and trends in global trade, financial markets and commodity markets we consider recent developments in emerging markets.