The International Monetary Fund (IMF) warned that the global economy faces an even deeper downturn than it previously projected, as the coronavirus pandemic continues to sow uncertainty and businesses around the world struggle to navigate their way amid the virus.
The IMF has downgraded its global GDP forecast for 2020, now expecting the world economy to shrink by 4.9 per cent, which is worse than the three per cent contraction it predicted in April, the lender said in an update to its World Economic Outlook.
For 2021, the IMF is predicting global output to decline by 5.4 per cent. This would leave 2021 GDP some 6.5 percentage points lower than in the pre-COVID-19 projections of January 2020.
Meanwhile, the flash US service sector purchasing managers index rose to a four-month high of 46.7 in June from 37.5 in the previous month, IHS Markit said on Tuesday.
On the other hand, the flash manufacturing sector purchasing managers index rose to a four-month high of 49.6 from 39.8 in May. The relatively stronger rise in manufacturing suggests that the factory sector is now seeing a quicker recovery.
The composite index rose to 46.8 in June from 37 in the prior month. Notwithstanding the improvement, the readings remain below 50, which indicates worsening conditions.
However, the big picture is that the economy now seems to be on the road to recovery following the coronavirus lockdowns.
Finally, German consumer sentiment is set to recover next month, reflecting the rapid reopening of the economy and society, survey results showed on Thursday.
The consumer sentiment index, published by the Nuremberg-based GfK institute and based on a survey of around 2,000 Germans, rose to -9.6 heading into July, rebounding from -18.6 the previous month and beating forecasts for a more moderate rebound to -12.0.
The pandemic is expected to sink Germany in its worst recession since World War II, and the government has approved two stimulus packages financed with record new borrowing to revive the economy.
This report was compiled by Bank of Valletta for general information purposes only.