The International Monetary Fund (IMF) released the October 2020 issue of their World Economic Outlook (WEO) report, analysed by Sea Intelligence Consulting.
Although the global economy is still predicted for a recession in 2020, the intensity of it is now lower than previously anticipated. Compared to their previous report in June, the IMF revised global economic projections up by 0.8 percentage points. What this means is that the global economy is now projected to shrink by -4.4% in 2020 compared to a -5.2% contraction in the June report. However, the expected recovery in 2021 was revised downwards by -0.2 percentage points to a growth of 5.2%.
For 2020, the advanced economies were revised upwards by a significant 2.3 percentage points, which means that although they are still predicted to be in a severe recession of -5.8%, it is not as bad as initially feared. Part of this could be explained by the exceptionally strong Transpacific demand especially on the US West Coast. Although the IMF have revised the 2020 economic projections upwards, they have also revised the 2021 projections downwards by -0.9 percentage points.
The outlook for world trade has also improved since the June report, with positive revisions across the board. World trade in 2020 was revised upwards by 1.5 percentage points to a contraction of -10.4%. Imports by the advanced economies were revised upwards by 1.7 percentage points to -11.5% while exports by the advanced economies were revised upwards by 2.0 percentage points to -11.6%. Imports by the emerging economies were unchanged at -9.4% and exports by the emerging economies were revised upwards by 1.6 percentage points to -7.7%.
While both advanced and emerging economies are predicted to have a strong recovery in 2021, we need to be mindful that a growth in 2021 will come from a lower 2020 base and any recovery would therefore be amplified.