The International Monetary Fund is forecasting that Ireland’s economy will decline by 6.8% in Gross Domestic Product (GDP) terms this year, as a result of the impact of the Covid-19 pandemic.
The figure is contained in the IMF’s World Economic Outlook, published today.
The IMF believes that unemployment in Ireland will average 12.1% this year and 7.9% in 2021.
It predicts that the economy will return to growth in 2021.
Globally, the IMF is forecasting that the economy will shrink by 3% this year as a result of Covid-19.
It predicts the Eurozone will contract by 7.5%.
In its World Economic Outlook, the IMF describes the ‘Great Lockdown’ as a “rare disaster”.
It says the magnitude and speed of collapse in activity is “unlike anything experienced in our lifetime”.
IMF Chief Economist, Gita Gopinath, says the cumulative loss in the value of world output could be £9 trillion, more than the combined economies of Japan and Germany.
The IMF says economies most reliant on tourism and travel will be the worst affected.
Emerging economies will be impacted too as investors will be less likely to want to risk their money.
It says this recession will be far worse than the 2007-08 global financial crisis as both advanced and developing economies will be in recession at the same time.
The IMF repeats its description of the ‘Great Lockdown’ as the worst recession since the Great Depression.
It advises policymakers to plan for recovery, which it thinks will come next year.
It says as containment measures are lifted, policies should shift towards supporting demand and incentives to get people back to work.
The IMF says fiscal stimulus that is co-ordinated will magnify the benefit for all economies. In other words, big spending programmes by governments would have a bigger impact, if planned in some way together with other countries.
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