IMF flags further cut to global economic forecasts

The IMF is likely to revise down its projections for the global economy this year to reflect the impact of the Covid-19 crisis.

The group predicted in April that the world economy would shrink by 3pc this year. It plans to release a new forecast on 24 June that is likely to reflect the "extremely challenging conditions" in the real economy, managing director Kristalina Georgieva said.

"We are likely to revise downward further on the basis of incoming data, which tells us that most countries are doing worse than we had projected," Georgieva said on 13 June.

Governments across the world have introduced fiscal support totalling $10 trillion, which has helped put a floor under the economy and is likely to reduce the longevity of the crisis, she said. Financial markets have recovered almost to pre-pandemic levels thanks to sizeable injections of liquidity. But the IMF warned of a "very dramatic collapse in trade" and speculation about a substantial reversal of global economic integration.

Georgieva's comments came as rising concerns about a second wave of coronavirus cases sent oil prices lower. Beijing has reported almost 100 new infections in recent days and shut down some parts of the city after going almost two months without any community spread. Cases are also rising in some areas of the US after lockdowns began to be lifted.

August Brent crude futures were down by 1.9pc at $38/bl at just before 12pm Singapore time (04:00 GMT), after earlier dropping as low as $37.56/bl. The July WTI contract fell by 2.8pc to $35.25/bl.

"This pandemic has been, and continues to be, like dominoes falling," Georgieva said, noting how the impact has spread from China and Asia to Italy, the US, Brazil, south Asia and Africa. "And we all know that it is not over until it is over everywhere."

By Kevin Foster