If someone naively thought that the economic crisis is behind us (or at least its climax), we have bad news for him. The International Monetary Fund (IMF) predicts that global public debt will reach its highest level of 101% in history this year alone. GDP. Thus, it will be a higher ceiling even than the debt seen after World War II. Information is provided in the announcement posted on Friday on the IMF website.
IMF: highest debt ever
IMF chief economist Gita Gopinath and director of the public finance department of the Vitor Gaspar institutions argue at the same time that, despite such worrying forecasts and record public debt, the authorities should not give up support programs to support the economy today. In their opinion, it is the departure from such programs that will end in disaster and may block the recovery of markets.
“Clamping the budget too early is a risk even greater than derailing the economic recovery (because of) future, even higher budget costs”
– Gopinath and Gaspar wrote in a joint note.
The IMF has also announced that it is forecasting a greater than expected global recession. The eurozone’s GDP will shrink by 10.2 percent, Latin America and the Caribbean – by 9.4 percent, and the US – by 8 percent.
Thus, the eurozone economy will shrink in 2020 by 2.7 percentage points. more than expected in April. Germany’s GDP will fall by as much as 7.8 percent (-0.8 percentage points against April), and France by 12.5 percent (-5.3 percentage points). At the same time, Spain and Italy’s GDP will shrink by 12.8 percent, respectively: -3.7 and -4.8 percentage points, respectively. – says the IMF.
The crisis will also hit the UK economy, whose GDP in 2020 is expected to decrease by as much as 10.2 percent. compared to 6.5 percent, which was still given in April.
The IMF also predicts that the global economy will shrink by 4.9 percent. compared to 3 percent projected in April.
The worst is ahead of us?
All this is not optimistic. As you can see, authorities all over the world are also moving towards Keynesianism – state interventionism, which may end differently. After World War I, this attitude did not save the markets at all. The US came out of the 1929 crisis only after World War II.