IMF Sees Worsening Economic Outlook for Emerging Markets

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Export powerhouse Germany will see a contraction of 6.0 percent this year, while Spain's economy, more dependent on tourism, will contract 12.8 percent.

The Eurozone will resume growth of 5.2 percent in 2021, the IMF said.

China, which saw a strong early reopening and rebound from the pandemic, will be the only economy to show positive growth in 2020, of 1.9 percent — nearly double the rate predicted in June — and reach 8.2 percent growth in 2021, its highest rate in nearly a decade, the IMF said.

China, where the coronavirus first surfaced late last year, had reopened most of its economy by April and has seen strong demand for exports of its medical supplies and technology products needed to aid remote working, the IMF said.

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But emerging markets other than China will see a contraction of 5.7 percent in 2020, worse than the 5.0 percent predicted in June.

The International Monetary Fund said the virus was continuing to spread in large emerging markets including India and Indonesia, and those economies are far more dependent on hard-hit sectors including tourism and commodities as well as on remittances and other sources of external finance.

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The IMF also said economic 'scarring' from job losses, bankruptcies, debt problems and lost schooling will hold back medium-term global growth after 2021 to about 3.5 percent, with a cumulative loss in output of up to $28 trillion from 2020 to 2025 compared to pre-pandemic growth paths.

(Writer: David Lawde | Editors: Andrea Ricci, Paul Simao)

Source: https://www.reuters.com/article/us-imf-worldbank-outlook/imf-sees-less-severe-global-contraction-but-worsening-outlook-for-many-emerging-markets-idUSKBN26Y1PZ