Due to the spreading of the coronavirus pandemic and its negative effect on various countries, the International Monetary Fund has officially declared the start of the global economic recession! Read more!

IMF officially announces global economic recession!

Since the rise of coronavirus cases globally, there have been many reports on its effect and fatality on the human race. On the other hand, the ongoing pandemic has also put significant pressure on the global economic scene; as it already shut down various activities across the globe. Furthermore, big financial centres like Europe, American are also facing a big problem.

In a recent news briefing on Friday, IMF’s Managing Director, Kristalina Georgieva, stated that they had reassessed the prospect for growth for both this year and 2021. She also added: “It is now clear that we have entered a recession – as bad as or worse than in 2009,”. Based on her statement, they believe that only by succeeding to contain the virus would help all countries to recover from the economic impact.

On the other hand, she raised the most significant concern they would face after the long-lasting consequence of the sudden stop of the world economy: a big wave of bankruptcies and layoffs. Not only it can weaken the recovery of the economy, but it can erode the fabric of global societies. Both IMF and different economists across the globe have given their prediction on the extreme COVID-19 driven economic recession.

What does the economic recession mean?

The IMF defines it as a period when economic output declines while the unemployment rate rises. You can understand that it will be an extended period of industrial decline globally. Furthermore, it could last up until a few months, with the most noticeable decrease rate in production, employment, real earnings and others. The last economic recession has taken place back in 2008 and 2009; where many countries like the United States and Europe encountered a rise in unemployment, company profits fell, financial markets tumbled, and the housing sector collapsed.

At that time, countries like the United States and people in Europe experienced an increase in unemployment. Besides, they face a decline in corporate profit, a decline in financial markets and a collapse in the housing sector. IMF recently has supported giving up the debt of the poorest country. However, the G20 leaders’ summit that took place almost on Thursday never addressed anything about this in their final statement.