The IMF’s World Economic Outlook released in October 2020, offers an oversight of the Global economy; the rekindling of the economic activity amidst the pandemic across advanced and emerging market economies.
Global growth in 2020 was revised at -4.4%, reflecting better-than-anticipated second quarter GDP outturns in advanced economies where economic activities started to rejuvenate. In details, recovery is expected to take place in 2021 but growth is expected to gradually slow in the medium term to about 3.5% projecting the high poverty levels and accumulated sovereign debt which resides due to the ongoing pandemic. Moreover, uncertainty remains due first to the risk of the continuing pandemic pressing on public health and other economic factors. Second, the risk of global spill overs, from low tourism levels to low remittances added to uncertainty. Third, timid progress with Covid-19 treatment which can help gain markets’ confidence and positively affect global capital flows.
It is worth noting that policymakers have a big role to infuse economies with higher productivity and resilient growth, which involves investment in health, education, research and technology. On a separate note, IMF and other international communities play a role in supporting developing countries deal with their health and debt crisis through grants and lending facilities. Governments of low-income countries must adhere to measures of low interest rates, extended debt maturities and restructuring of corporate taxation to help mitigate public debt.
On the health side, countries with high contamination must impose lockdown measures where applicable and adopt adequate health care with the needed resources (medical equipment, care units..). Moreover, post-pandemic is illustrated by enhanced global activity and ongoing international support along with less damages and calamitous health effects.
Across regions, annual GDP growth for advanced economies was estimated at -5.8% for year 2020. USA projected a GDP growth of -4.3% for year 2020 and expected to increase to 3.1% in year 2021. Moreover, China’s GDP growth measured 1.9% for 2020 and expected to reach 8.2% in 2021.
For Middle East and North Africa, annual GDP was estimated at -5.0% in 2020 and expected to move upwards to reach 3.2% in year 2021. Importantly, Lebanon witnessed a downward move in its annual GDP, estimated at -25% in year 2020, with nominal GDP down to $ 18.7 Billion. Projections for Lebanon’s Budget deficit marked -16.5% of GDP in 2020 and -16.3% of GDP for the Current Account Balance. On a last note, annual Consumer Prices denoted an increase to 144.5%.