To be fair, the latest set of forecasts released overnight by the International Monetary Fund is a doozy.
It has taken a red pen to its April forecasts, marking them down from a forecast 3 per cent contraction in global GDP this calendar year to a forecast 4.9 per cent contraction.Not only is the IMF expecting a deeper global downturn, but it is decidedly more pessimistic on prospects for recovery.First, even as infections peak and restrictions are lifted in many countries, the IMF expects to see citizens adopting more persistent social distancing practices.
Furthermore, the 1.3 billion school children who have been affected by interrupted schooling will suffer a "significant loss of learning, with disproportionately negative effects on earnings prospects for children in low-income countries".Worryingly, the IMF says financial markets have yet to grasp the full picture, with a "disconnect" existing between the economic outlook and market sentiment.
As the Australian government mulls the impending end of its extra-ordinary supports, including the JobKeeper wage subsidy, the IMF warns such policies should not be "prematurely withdrawn".As economies reopen, the IMF advises the focus must now shift "from protecting jobs and shielding firms to facilitating recovery and removing obstacles to worker reallocation".
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