Looking at country forecasts, the United States is expected to contract by 8 percent this year. The IMF had estimated a contraction of 5.9 percent in April.
Similarly, the fund also downgraded its forecasts for the euro zone, with the economy now seen shrinking by 10.2 percent in 2020.
Brazil, Mexico and South Africa are also expected to contract by 9.1 percent, 10.5 percent and 8 percent, respectively.
In order to mitigate some of the economic impact from the pandemic, governments across the world have announced massive fiscal packages and new borrowing. As a result, public finances are seen deteriorating significantly as a result.
“The steep contraction in economic activity and fiscal revenues, along with the sizable fiscal support, has further stretched public finances, with global public debt projected to reach more than 100 percent of GDP this year,” the fund said.
Under the IMF’s base case, global public debt will reach an all-time high in 2020 and 2021 at 101.5 percent of GDP and 103.2 percent of GDP, respectively. In addition, the average overall fiscal deficit is set to soar to 13.9 percent of GDP this year, 10 percentage points higher than in 2019.
There have been more than 9 million confirmed infections worldwide from Covid-19, according to Johns Hopkins University. The United States, Brazil and Russia are currently the nations with the highest number of cases globally. – CNBC