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IMF cuts its global economic forecasts for 2021 and warns of 'long, uneven' recovery

October 13, 2020. Summarized by summa-bot.

NEW YORK, UNITED STATES - 2020/09/25: A view of a Century 21 department store in Lower Manhattan. Century??21??Stores, an iconic New York discount department store chain, filed for bankruptcy with plans to shutdown, becoming the latest victim of the retail industry carnage that's accelerated during the pandemic. (Photo by John Nacion/SOPA Images/LightRocket via Getty Images)

A strong comeback in 2021 is needed to help the global economy heal from the coronavirus pandemic. But the International Monetary Fund is downgrading its forecasts for next year, and warning of a long, slow recovery that will stoke poverty and damage growth.

The IMF predicted on Tuesday that the world economy will shrink by 4. 4% in 2020, a less severe contraction than it forecast in June.

The IMF now sees a 5. 2% increase in global output next year, down from 5. 4% in its previous report.

Output in advanced economies, as well as emerging markets — with the exception of China — is projected to remain below 2019 levels next year, she said.

Looking ahead, the IMF offered a bleak look at how the global economy might perform over the medium term, its first such forecast since the outbreak began.

Global growth is expected to slow to roughly 3. 5% between 2022 and 2025, leaving the output of most economies below levels that were predicted before the pandemic.

One consequence will be worsening inequality and a "severe setback" for improvements to living standards, both in developed economies like the United States and emerging markets like Mexico and Argentina.

The IMF's predictions assume that social distancing will continue into next year before fading over time as people get vaccines and Covid-19 treatments improve.

The US economy is expected to shrink by 4. 3% in 2020 before expanding by 3. 1% in 2021.

Among emerging market economies, India — a key engine of global growth before the pandemic — will be especially damaged.

The IMF thinks its economy will shrink 10. 3% this year.

Among major economies, only China is expected to expand in 2020.

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