The other day I caught up with an old friend who I hadn’t spoken to in years. I asked him how he was doing. “Everything was good until corona,” he said. I laughed, kind of, and told him that can be said about pretty much anything.
In hindsight it’s hard to think of something that wasn’t going swimmingly compared to where we’re at now. Case in point: the world economy.
According to the International Monetary Fund, global GDP will see a contraction of 3% as a result of COVID-19. Before the pandemic, the IMF predicted 3.3% of global growth.
Lest you think that’s an insignificant swing. The Great Recession of 2009 saw a 0.1% dip in the global economy. o.1%! And the years that followed objectively sucked for many people. The IMF says the impending slump will be the biggest since the Great Depression of the 1930s.
“The world has been put in a great lockdown,” the IMF’s chief economist, Gita Gopinath, told reporters. “This is a crisis like no other.”
And so we enter a new economic period: the Great Lockdown.
Of course, some countries will fare better than others. Canada’s economy is expected to shrink 6.2%, which is not great but also not terrible. Terrible is the prognosis for countries like Italy and Spain, which the IMF predicts will see GDP falls of 9.1% and 8%, respectively.
Meanwhile, China and India, two of the world’s fastest-growing economies, will see their growth stymied. China’s growth is expected to fall from 6.1% last year to 1.2% in 2020. India is expected to see its growth drop to 1.9% this year, down from 4.2%.
“The economic landscape will be altered significantly for the duration of the crisis and possibly longer, with greater involvement of government and central banks in the economy,” said Gopinath about the bleak outlook. The worst-case scenario is an 11% drop, though that seems unlikely for the time being.