FMO carefully monitors developments and the impact of COVID-19 in emerging markets, in particular to tend to the needs of clients for further financial and non-financial support.
IMF World Economic Outlook
- The IMF has released its October 2020 global economic analysis and forecast.
- While the IMF is predicting a somewhat less severe though still deep recession in 2020, this is mostly due to better Q2 performance in Advanced Economies (AEs) and China, and signs of a more rapid recovery in Q3.
- However, prospects for some Emerging Markets (EMs) have worsened significantly, including India.
- The recovery in 2021 is also expected to be more modest, as social distancing will likely to continue throughout the year, negatively impacting economic activity.
- The forecast remains highly uncertain, given that the current return to lockdowns of European economies was unforeseen by the IMF. Indeed, it is warned that ‘recovery is not assured while the pandemic continues to spread’.
- The Covid crisis is expected to weigh on our societies and economic growth for years to come. Most economies will experience lasting damage to supply potential, reflecting scars from the deep recession and health crisis (unemployment, bankruptcies, increased debt levels, loss of human capital due to disruptions to education) and the need for structural change (adjustment of chronically unprofitable sectors).
- Poverty levels and inequality will rise as the crisis disproportionally affects women, the informally employed, and those with lower education.