First quarter 2020 global macroeconomic outlook

May 2020

The lock-down of the global economy to slow the spread of the COVID-19 pandemic led the IMF to materially alter expectations for economic growth.

  • The IMF now forecasts a decline in global GDP of 3.0% in 2020, followed by a sharp recovery of 5.8% in 2021.
  • In advanced economies, GDP is projected to decline by 6.1% for 2020, and recover by 4.5% in 2021, as economies reopen and progress is potentially made on a vaccine for the virus. The US is expected to fare marginally better, declining 5.9% in 2020 and recovering by 4.7% in 2021. The Japanese economy is expected to decline by 5.2% in 2020, but only recover by 3.0% in 2021.
  • The Euro-area is forecasted to take the greatest hit to growth, declining 7.5% in 2020 and recovering 4.7% in 2021. Expectations for economies like Spain and Italy, which implemented some of the most stringent and aggressive quarantine and containment measures, are heavily influencing weakness across the broader region; those economies are anticipated to decline by 8.0% and 9.1%, respectively.
  • Growth projections are also weak for emerging economies, although China is expected to post positive growth of 1.2% for 2020, and a significant 9.2% in 2021. The positive growth expectations are due primarily to the Chinese government’s ability to quickly impose aggressive distancing measures, largely isolate and contain the virus, and then quickly move to re-open their economy.
  • Inflation is projected to decline, consistent with decreased economic activity, with inflation across most developed economies expected to be below 1.0%; in some countries, such as Japan, deflation is expected.