Daily Memo: Disastrous Growth Forecasts and Unhealthy Banks

The IMF gave its global economic growth projections a buzz cut.

Economic damage assessment. The International Monetary Fund trimmed its global growth forecast on Tuesday. The IMF is projecting the coronavirus slowdown to be the deepest since the Great Depression (albeit not nearly as long-lasting), with advanced economies expected to contract by 6.1 percent this year and most emerging economies to shrink by at least 1 percent. The U.S. is facing a 5.9 percent contraction, with unemployment remaining above 9 percent through 2021. The U.K. is looking at a 6.5 percent contraction in 2020, while the eurozone is expected to drop by 7.5 percent (led by Italy at 9.1 percent). China and India are forecast to stay in the black at 1.2 percent and 1.9 percent growth, respectively. But neither country can politically afford anemic growth, and those projections are likely too optimistic. On Tuesday, for example, Indian Prime Minister Narendra Modi extended his country’s lockdown — the world’s largest and perhaps most difficult to manage amid a pandemic — and pledged to curb the virus “at any cost.” Given the uncertainty about how the pandemic will play out, economic forecasts must be handled with care. But the IMF is putting some money where its mouth is, canceling $214 million in […]

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