Tuesday, March 24 2020 12:49

ArmInfo.In 2020, the global economy will face a recession that will be worse than the global financial crisis of 2008-2009, said Kristalina Georgieva, head of the International Monetary Fund (IMF), following an emergency teleconference with the heads of central banks and finance ministries of the G20 countries.

According to her, quoted by RIA Novosti, investors since the start of the crisis have withdrawn from developing countries due to the coronavirus COVID-19 markets of $ 83 billion. This is the largest ever recorded capital outflow, Ms. Georgieva said. Prospects for global growth: for 2020 it is negative - the recession is at least as bad as during the global financial crisis or even worse. But we expect recovery in 2021>, the report says. Among the measures taken by the IMF to combat the crisis, she announced her readiness to allocate $ 1 trillion. According to Mrs. Georgieva, almost 80 countries have turned to the IMF for financial assistance.

Recall, due to the coronavirus pandemic, many large enterprises were forced to suspend their work. Small and medium-sized businesses in countries affected by the virus suffer losses. The global airline industry has estimated at $ 200 billion loss from a sharp reduction in flights.

Leading financial institutions of the United States of America agree with IMF forecasts. Bank of America believes that the US economy has completed a multi-year growth period and entered a recession. The inevitability of a widespread crisis is also being discussed in two other leading financial institutions of the country - Goldman Sachs and Morgan Stanley. As expected in Bank of America (BofA), this crisis will prove to be one of the strongest in history. Already in the second quarter, GDP will collapse by 12% - a record since the Second World War. The key reasons are a decline in business activity and a decrease in consumer spending due to coronavirus. "We officially declare that the US economy has fallen into recession by joining the rest of the world," said a report prepared by analysts led by leading economist at Bank of America Michelle Meyer. In her opinion, "a deep drop has already begun>, since the coronavirus has hit virtually all sectors. This will inevitably lead to increased unemployment and reduced incomes." Throughout the second quarter, jobs will be lost for a million Americans a month. As a result, unemployment will reach 3.5 million people. Most of all, this will affect the entertainment industry, transportation, hotel business and retail. The number of applications for unemployment benefits has already risen sharply after companies dismissed people as a precaution against the spread of COVID-19. Last week, 281 thousand applications were received - this is a two-year maximum (analysts expected no more than 220 thousand). The main victims are low-skilled workers with hourly wages. This is the effect of the downward spiral of economic activity: an external shock forces consumers to spend less money, enterprises receive less profit and subsequently lay off workers.

Two other leading US banks, Goldman Sachs and Morgan Stanley, also announced the start of the recession. Morgan Stanley considers the "base case" a 0.9% slowdown in global GDP growth this year.  Goldman Sachs is even more pessimistic: their forecast is 1.25%.

The Washington-based Institute of International Finance (IIF) also warned of this. According to updated data, in 2020 the world economy will add not 1.6%, but only 0.4%. IIF for the second time in a month significantly worsens the forecast. Back in early March, experts talked about 2.6%. Now, analysts at the institute are confident that a third of the global economy is in crisis. So, the recession is observed in the USA, the European Union and Japan, which account for 15.1%, 11% and four percent of world GDP, respectively. According to IIF, the fall will last at least until the middle of the year. The fact that the US economy has stopped growing is also reported by one of the largest American business schools, UCLA Anderson. They believe that changes for the better can be expected only by the end of September. The country's economy will shrink by 6.5% in the second quarter and by 1.9% in the third.