Weekly Economic And Financial Commentary – June 29, 2020

Following more telling evidence of the impact of COVID-19 pandemic on economic activity in the first half of 2020 and expected gradual recovery than the earlier estimate in April, the IMF in its latest World Economic Outlook Update, now forecast 2020 global GDP to contract by 4.95% compared to the estimate of 3% contraction earlier in April. The revision emanated from now expected deeper contractions in both advanced (-8.0% YoY vs. -6.1% YoY in April) and emerging markets & developing economies (-3% YoY vs. -1% YoY in April), unlike the 2008-09 financial crisis when emerging markets still managed to record some growth. Among major economies the IMF expects the U.S economy to contract by 8% YoY (April: -5.9% YoY), the Euro area by 10.2% YoY (April: -7% YoY), the UK by 10.2% YoY (April: -6.5% YoY), Japan by 5.8% YoY (April: -5.2% YoY), while China is expected to record negligible growth of 1% YoY vs. April estimate of 1.2% growth . For Sub-Saharan Africa, the IMF forecasts contraction of by 3.25% YoY (vs. April of 2.9% YoY). The Fund now expects Nigeria and South Africa to contract by 5.4% YoY and 8.0% YoY (vs. -3.4% YoY and -5.8% YoY in April) respectively. Over in 2021, the IMF expects improvement in global growth by 5.4% YoY, exceeding the pre-coronavirus growth trajectories of major economies.