Bermuda Post

Thursday, Oct 29, 2020

La economista del FMI Gita Gopinath

The global economy will fall less than expected, but new restrictions due to COVID-19 raise doubts

The economic contraction due to the pandemic this year will be less than expected a few months ago, an IMF forecast revealed Tuesday, but new restrictions in Europe given the increase in infections and the suspension of the clinical trial of an experimental treatment show that it will still take a long time to overcome the crisis.
World GDP will decline 4.4% this year, compared to 5.2% estimated in June, according to the IMF. The improvement is mainly due to the opening of some advanced economies, although the reactivation towards next year loses strength.

Living with the new coronavirus is a different challenge, but the world adjusts, IMF economist Gita Gopinath said Tuesday. However, this crisis is far from over, she warned.

New preventive closures in Europe raise alerts about the strength of the recovery of the economies that have driven expectations. In fact, the IMF lowered its recovery forecast for 2021, to 5.2% (-0.2 points).

The new coronavirus pandemic has caused more than one million deaths in the world and almost 38 million infections. And it slowed down economies, regardless of size.

In the United States, the world's leading economy, GDP will fall 4.3% against the 8% estimated in June, according to the IMF, while the Euro Zone will lose 8.3% compared to the 10.2% previously forecast.

While the bid continues without signs of agreement, Gopinath indicated that a stimulus package in the United States would boost its growth by two percentage points next year, above the 3.1% increase in GDP expected.

But although this Tuesday the Republican side was open to voting on a small business loan plan before the November elections, the Democrats refuse to admit initiatives that do not include broad aid.

Meanwhile, the US pharmaceutical group Eli Lilly announced the suspension of a clinical trial of its experimental treatment with antibodies against COVID-19 for unspecified safety reasons.

The treatment is similar to what President Donald Trump received shortly after his symptoms appeared.

With only 8% of the world's population, Latin America and the Caribbean account for almost 30% of infections and more than a third of deaths from COVID-19. The region has more than 10.1 million infected and 370,000 deaths.

Even in this scenario, the IMF improved its 2020 forecast for this area. But Gopinath warned: We see a very gradual recovery in Latin America, it will take until well into 2023 to barely return to the levels (of GDP) of 2019.

Regional GDP will contract 8.1% in 2020, instead of 9.4%, as expected.

According to Gopinath, many countries had vulnerabilities when entering this crisis, such as high debt and growth weaknesses.

An example is Argentina, in quarantine since March 20, which aggravated the recession it has been going through since 2018.

With 903,717 cases of covid-19, and 24,186 deaths, Argentina adds a forecast of a fall of 11.8% of GDP this year, against -9.9% expected before. And all while negotiating a new agreement with the agency.

Despite that on Tuesday a dozen secondary schools opened their doors in the city of Buenos Aires, at the beginning of a slow return to face-to-face classes.

Meanwhile, other countries in the region are experiencing ups and downs.

The president of El Salvador, Nayib Bukele, called on the population to remain alert: We have confirmed a re-outbreak of covid-19 cases, he tweeted, when the deaths reached 899.

Meanwhile, Mexico, with 83,945 deaths, signed purchase agreements with three pharmaceutical companies that work on vaccines for 1,659 million dollars, which together with a WHO mechanism will protect up to 116 million Mexicans, the government reported.

In Mexico, 1,646 health workers died and 122,041 were infected, according to official figures as of October 5.

But the WHO released an encouraging data: the rate of infection by COVID-19 among health professionals in the world shows "a substantial decrease", going from 14% of those infected to less than 3% in many countries.

In Europe, where there were more than 243,000 deaths and 6.6 million infections, criteria - of voluntary application - were adopted to coordinate travel restrictions within the European Union, and to unify the measures approved by each country.

In France, one of the most affected countries in Europe, new restrictions are expected from Wednesday.

Meanwhile, the government of Boris Johnson was the target of criticism in the United Kingdom, after it was discovered that the government ignored the scientific advice three weeks ago to impose a lockdown to stop the virus, whose second wave is currently spreading.

In Italy, the government banned outdoor and indoor parties and celebrations, and limited the number of guests in homes to six.

In sports, the news was the contagion of the Portuguese Juventus star, Cristiano Ronaldo, who is asymptomatic and isolated.

In addition, the coronavirus hit the Giro d'Italia, with the abandonment of two teams.

Related Articles

Bermuda Post