The IMF says the Covid-19 pandemic is a crisis like no other, and the world’s recovery is uncertain. So, what does this mean for the world’s economic outlook? Following the latest release of their World Economic Outlook, here’s our analysis of the IMF data into 6 succinct charts, thanks to Tableau’s amazing visualisation capabilities.
WHERE WERE WE?
The world enjoyed a period of strong growth in 2018 and 2019, with only three exceptions (Argentine, Iran and Mexico), in the 30 major economies reported. This symbol map shows actual GDP growth in these 30 major economies in 2018 and 2019.
China sat at the top of the table for the highest GDP growth in both 2018 and 2019. And as you can see in the bar chart below, the top 10 highest growing economies are all from the Emerging and Developing Economies group. The highest-ranking Advanced Economy was the US, coming in at 11th.
SO WHERE ARE WE NOW?
There’s no way to sugar-coat the latest outlook for 2020: it’s going to be pretty rough. The projected GDP growth for the world in 2020 now stands at -4.9%, down from –3% in the April forecast, and compares to 2.9% growth in 2019. 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 thought.
Only two economies are now forecast to grow, Egypt and China, and right now, even that seems quite a feat. But, even with this recent downgrading of its forecast, the IMF predicts 2021 will be different, with every one of the 30 economies back to growth (although, of course, it will be from a smaller starting point). The chart here shows actual GDP growth in 2019, with the current projections for 2020 and 2021.
Countries have been affected very differently and their outlook is of course dependent on global, macro and micro factors. Egypt and China top the table for forecast growth in 2020, with France, Spain and Italy expected to suffer the largest contractions. Countries in the Advanced Economy group are much more likely to be in the bottom half of the rank in 2020 but their 2021 forecasts are likely to be above average.
And the UK? We’re 5th from the bottom, with an expected 10.2% contraction in 2020 and an above-average forecast of 6.3% next year. That‘s not enough to get us back to pre-2020 levels.
AND WHAT’S CHANGED IN THE LATEST FORECAST?
The IMF makes clear that there is a higher-than-usual degree of uncertainty around its forecast. The baseline projection rests on key assumptions about the fallout from the pandemic, and we can all appreciate how hard it must be to do this with any precision.
Its GDP growth projection for 2020 has fallen by 1.9% since the April 2020 World Economic Outlook forecast to -4.9% (compared to growth of 2.9% in 2019). What changed? 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 thought.
This map shows the % change in forecast between the April and June 2020 outlooks. 2020 looks dramatically different, with India downgraded the most. Two brighter spots are Australia and Pakistan whose 2020 forecasts have been improved. But, as a result of the downgrading in 2020, 2021 looks somewhat brighter for most, with many more countries’ forecasts upgraded.
This chart shows how economies’ GDP forecasts for 2020 and 2021 have been upgraded or downgraded from April’s forecast to June’s. Countries are ranked from the most positive change to the most negative expected in 2020. You’ll also notice that there is no relationship between those countries with an improved forecast for 2020 and the changes forecast in 2021.
SUMMARY Forecasting is notoriously difficult at the best of times but the uncertainties in the outlook at the moment are extreme. We can all agree though it’s going to be a bumpy few years ahead, with some countries far more severely affected than others. And a final point, made by the IMF - please don’t forget the impact on low-income households is particularly acute. It puts at risk the significant progress made in reducing extreme poverty in the world since the 1990s.
For us as individuals, clearly, we should be doing what we can to minimise the risks of the virus spreading. And for us, in our capacities as entrepreneurs, business owners, employers or employees, there’s never been a more important time to think creatively, listen to our customers, design better products, improve sustainability, be more inclusive, help each other and make things happen. After all, we are all in this together.
REFERENCES World Economic Outlook Update, June 2020, published by the IMF is here: https://www.imf.org/en/Publications/WEO/Issues/2020/06/24/WEOUpdateJune2020
Database of WEO Groups and Aggregates Information is here: https://www.imf.org/external/pubs/ft/weo/2020/01/weodata/groups.htm#ea