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Uncertain but Diminishing Recovery

In April, the IMF projected global GDP to be -3.0% and the US at -5.9%. Today, the IMF announces an Uncertain Recovery and a Crisis Like No Other.

Global growth is projected at –4.9 percent in 2020, 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast. The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. In 2021 global growth is projected at 5.4 percent. Overall, this would leave 2021 GDP some 6½ percentage points lower than in the pre-COVID-19 projections of January 2020. The adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s.

Quarterly World GDP

Quarterly World GDP IMF

Get used to downgrades. The IMF is perennially optimistic. 

In this case especially China.

Nonetheless, this is a huge downgrade.  Global GDP for the year 2021 as a whole is  forecast to just exceed its 2019 level.


The IMF says there is pervasive uncertainty around this forecast like April.

For the first time in history, all regions are projected to experience negative growth in 2020. 

It seems like the certainty we have is increasingly negative.

Upside Risks

  1. Vaccine 
  2. Other medical breakthroughs 
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Downside Risks 

  1. Bigger outbreaks
  2. More quarantines
  3. Firm closures
  4. Hiring 
  5. Bankruptcies
  6. Tighter financial conditions
  7. Trade tension between the US, China, EU
  8. Opec
  9. Weak demand
  10. High debt levels

IMF's Key Assumption

Countries will not reinstate stringent lockdowns of the kind seen in the first half of the year, instead relying on alternative methods if needed to contain transmission (for instance, ramped-up testing, contact tracing, and isolation).

Bear in mind that the revised forecast to the downside included that key assumption. 

Message for Trump

All countries—including those that have seemingly passed peaks in infections—should ensure that their health care systems are adequately resourced. The international community must vastly step up its support of national initiatives, including through financial assistance to countries with limited health care capacity and channeling of funding for vaccine production as trials advance, so that adequate, affordable doses are quickly available to all countries. Where lockdowns are required, economic policy should continue to cushion household income losses with sizable, well-targeted measures as well as provide support to firms suffering the consequences of mandated restrictions on activity. Where economies are reopening, targeted support should be gradually unwound as the recovery gets underway, and policies should provide stimulus to lift demand and ease and incentivize the reallocation of resources away from sectors likely to emerge persistently smaller after the pandemic.

That message was to "all countries" but one has to wonder if it was pointed at the US.

Houston Will Exceed ICU Capacity by Tomorrow

Note that Houston Will Exceed ICU Capacity by Tomorrow.

Fake News of the Day

In the fake news of the day Trump says States are Testing Too Much.

No medical experts of any merit, including his own staff would agree. 

Yet, Trump just cut funds for more testing in five states. See the above link for details.