I have good news and bad news.
Well, the IMF predicted on Tuesday that the world economy will shrink by 4.4% in 2020.
I know it doesn’t sound good but not as bad as their original prediction back in June. So, let’s consider that a win with all things considered.
The improvement is driven by a stronger than expected recovery of the United States and Europe after lockdowns lifted. China’s growth also contributes to that.
Bad news – They think there will be a 5.2% increase in global output next year instead of the 5.4% they originally predicted.
IMF chief economist Gita Gopinath said in a blog post that recovery is likely to be long, uneven, and highly uncertain.
Global growth is expected to slow to roughly 3.5% between 2022 and 2025, leaving the output of most economies below levels that were predicted before the pandemic.
Yes, that’s a 3-year crawl and the aftershock will even be worse. Inequality will be worse.
Standards of living will go back a decade.
Extreme global poverty is also expected to rise for the first time in more than two decades.
The IMF’s predictions assume that social distancing will continue into next year before fading over time as people get vaccines and Covid-19 treatments improve.
They also expect the US economy shrink by 4.3% in 2020 but might recover by a little over 3% in 2021.
On the other hand, the 19 countries that use the euro will experience a harsher contraction but a sharper recovery, with output falling by 8.3% this year before jumping 5.2% next year.
So, yes, we will recover BUT it won’t be fast enough. This is important especially for those who are already planning for retirement or to new investors.
Returns on any kind of investment won’t be as high. There will also be a lot of commodities and services that will be rendered unwanted post-pandemic as the world redesigns its lifestyle.
Do one fundamental thing first, protect your investment with precious metals. It is still the best safe haven investment.
You can be assured that the value of your investment now will be protected after this is over.