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IMF: Worst economic slump since Great Depression

Everyone is wondering what the economy will look like on the other side of this whole thing. As time goes on, the picture is becoming a little clearer, and many economists are offering their forecasts.

Starkest of all perhaps is the IMF’s latest projection. Here’s what the New York Times reported this morning:

In its World Economic Outlook, the I.M.F. projected that global growth will contract by 3 percent in 2020, an extraordinary reversal from earlier this year, when the fund forecast that the world economy would outpace 2019 and grow by 3.3 percent.

This year’s fall in output would be far more severe than the last recession, when the world economy contracted by less than 1 percent between 2008 and 2009. A 3 percent decline in global output would be the worst since the Great Depression, the I.M.F. said.

The economic damage in the United States is expected to be severe, the I.M.F. said, with the American economy projected to contract by about 6 percent in 2020. The global group cast doubt about the prospect of a “V” shaped recovery in the United States, suggesting that a sharp rise in unemployment and disruptions to supply chains will keep the economy below its pre-virus trend next year.

Source: The New York Times

Goldman Sachs’ economists offered a little more detail on the US economy:

We expect declines in services consumption, manufacturing activity, and building investment to lower the level of GDP in April by nearly 10%, a drag that we expect to fade only gradually in later months. We now forecast quarter-on-quarter annualized growth rates of -6% in Q1, -24% in Q2, +12% in Q3, and +10% in Q4, leaving full-year growth at -3.8% on an annual average basis and -3.1% on a Q4/Q4 basis.

Source: Goldman Sachs

Note: The chart above comes from Bloomberg.