According to the International Monetary Fund’s March 2020 World Economic Outlook (WEO) report, the global economy is currently experiencing a “great lockdown” as a result of the shock caused by the spread of the Covid-19 virus throughout the world. According to the report, the health measures taken to slow the spread of the virus, protect lives and allow health systems to cope have required confinement, lockdowns and widespread closures. The report also noted that the global economy will suffer a recession worse than the one witnessed during the global financial crisis of the last decade. In this regard, global growth is expected to shrink from 2.9% in 2019 to a downwardly revised economic contraction of 3% in 2020 compared to a previous growth estimate of 3.4% in its October 2019 WEO report. The IMF also stated that the global growth projections are limited to the years 2020 and 2021 due to the high levels of uncertainty surrounding spending patterns, behavioral changes and volatility of commodity prices, only to name a few. In this vein, the IMF anticipated growth in advanced economies to deteriorate from 1.7% in 2019 to -6.1% in 2020. Delving further into details, the report projected economic contractions of 5.9% in the United States, 7.5% in the Euro area, 6.5% in the United Kingdom, and 5.2% in Japan during the year 2020. The report predicted growth in emerging markets and developing economies to decelerate from 3.7% in 2019 to -1% in 2020. The report also mentioned that if the coronavirus pandemic fades in the second half of 2020 and containment efforts start to dissipate, economic activity will pick up expecting partial recovery in 2021, where global growth is projected to reach 5.8%. The IMF also predicted economic growth for advanced economies to drop from 1.7% in 2019 to -6.1% in 2020 before registering a real growth of 4.5% in 2021.

On the regional front, the WEO report projected an economic contraction in the Middle East & Central Asia (MECA) region of 2.8% in 2020 and a real growth of 4.0% in 2021. Growth forecasts for the MECA region were downwardly revised from 2.9% for 2020 in the IMF’s October 2019 WEO report. These revisions mainly come in light of the decline in oil prices since the start of 2020 coupled with the deterioration of near-term prospects for oil-exporting countries and the outbreak of the coronavirus.

Locally, the IMF projects a contraction in the Lebanese economy of 12% in 2020, compared to a 6.5% contraction in 2019. It also anticipated the country’s current account deficit to GDP ratio to narrow from 20.6% in 2019 to 12.6% in 2020 as a result of the sizeable drop in imports after the October 17 uprising.