The International Monetary Fund (IMF) is likely to further revise economic growth forecasts downwards in its upcoming outlook update due to the severe impact of the coronavirus pandemic and the resultant lockdowns across the world.
In a blog post on Tuesday, the Chief Economist of IMF, Gita Gopinath, said that although many countries begin to ease containment policies and gradually permit the resumption of economic activity, there remains "profound uncertainty" about the path of the recovery.
"For the first time since the Great Depression, both advanced and emerging market economies will be in recession in 2020. The forthcoming June World Economic Outlook Update is likely to show negative growth rates even worse than previously estimated. This crisis will have devastating consequences for the world's poor," she said.
Gopinath said that the "Great Lockdown" is expected to play out in three phases, first as countries enter the lockdown, then as they exit, and finally as they escape the lockdown when there is a medical solution to the pandemic.
Many countries are now in the second phase, as they reopen, with early signs of recovery, but with risks of second wave of infections and re-imposition of lockdowns.
Surveying the economic landscape, the sheer scale and severity of the global lockdown are striking, she added.
"Most tragically, this pandemic has already claimed hundreds of thousands of lives worldwide. The resulting economic crisis is unlike anything the world has seen before," the IMF Chief Economist said.
She said that it is possible that with pent-up consumer demand, there will be a quicker rebound, unlike after previous crises. However, this is not guaranteed in a health crisis as consumers may change spending behavior to minimise social interaction, and uncertainty can lead households to save more, the blog post added.