The global economy will return to growth of 5.2 per cent next year, the International Monetary Fund said, but the rebound will be slightly weaker than forecast in June, partly due to the extreme difficulties for many emerging markets and slowing reopening momentum as the virus continues to spread.
Stating that India's GDP contracted much more severely than expected in the second quarter, Gopinath said, "the economy is projected to contract by 10.3% in 2020, before rebounding by 8.8% in 2021".
At the same time, it expected that the Egyptian economy would achieve growth rates of 5.6 percent over the medium term by 2025.
So long as the pandemic is controlled next year, the fund expects a rebound of 5.2 per cent in the global economy in 2021, a forecast just 0.2 percentage points worse than in June.
Gita Gopinath said in an interview that a U.S. rescue package on the order of the $2.2 trillion CARES Act approved in March would increase growth in the world's biggest economy by two percentage points next year, over the 3.1 percent GDP rise now forecast.
The IMF on Tuesday predicted a deep global recession this year and the world growth to be - 4.4 per cent, asserting that the global economic crisis is far from over mainly due to the impact of the coronavirus pandemic.
China 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 International Monetary Fund said. Countries that rely more on contact intensive services and oil exporters face weaker recoveries compared to manufacturing-led economies.
The report also praises governments for launching extraordinary economic interventions, crediting them with "preventing a recurrence of the financial catastrophe of 2008-09".
Iran's Rouhani says new USA sanctions can not break 'resistance'
He went on to say that the United States could not achieve its goals by imposing economic sanctions on the Islamic Republic. In invoking this clause, the U.S referred to Iran's "significant non-compliance" with the nuclear deal.
The uncertainty surrounding the baseline projection is unusually large. According to the report, India is among those likely to suffer the greatest damage from global warming, reflecting its initially high temperatures.
Policy makers must avoid prematurely withdrawing support in order to avoid setbacks, Gopinath said.
"The poor are getting poorer with close to 90 million people expected to fall into extreme deprivation this year".
Overall, the fund sees global output by the end of 2021 being 0.6 per cent higher than at the end of 2019, before the pandemic, but that's driven nearly entirely by China.
"This is the worst crisis since the Great Depression, and it will take significant innovation on the policy front, at both the national and worldwide levels, to recover from this calamity", Gopinath said.
The IMF official again hammered home the message that governments must continue to provide support to workers and businesses, but cautioned that "the longer this crisis continues, it's going to be harder for governments to provide income support".