In its latest World Economic Outlook published on Tuesday, the International Monetary Fund (IMF) predicts global output will fall by 4.4 per cent in 2020, better than the 5.2 per cent slump forecast in its June update. The upgrade is supported by better-than-expected outcomes in the main economies in the second quarter despite the lockdowns to battle the coronavirus pandemic. However, the outlook remains uncertain, especially for emerging markets, the fund said.
The global economy is forecast to return to growth of 5.2 per cent in 2021. This rebound is slightly weaker than the June forecast, owing partly to the extreme difficulties for many emerging markets and a slowdown in the reopening of economies due to the continued spread of the coronavirus.
Meanwhile, the UK unemployment rate increased and redundancies reached their highest level since the global financial crisis in the three months to August, even ahead of the scaling back of the government’s furlough scheme and increasing fear of more restrictions.
The International Labour Organisation (ILO) jobless rate rose by 0.4 percentage points from the prior quarter to 4.5 per cent in the three months to August, the Office for National Statistics reported on Tuesday. With the national furlough scheme closing at the end of this month and the new COVID-19 restrictions set to stall the economic recovery, a second bigger wave of unemployment is probably on its way, said Paul Dales, an economist at Capital Economics.
Finally, in China, the rise in consumer prices slowed for a second month in a row in September, official data showed on Thursday, as pork supplies bounced back from the devastating African swine fever while farms recovered from flooding. The consumer price index, or CPI, a key measure of retail inflation, rose by 1.7 per cent last month from a year ago, compared with a 2.4 per cent reading in August, according to the National Bureau of Statistics. The increase was less than expected.
“Looking through the volatility in food prices, the broader disinflationary impact from the COVID-19 downturn continued to ease,” said Julian Evans-Pritchard, senior China economist of Capital Economics.
This report was compiled by Bank of Valletta for general information purposes only.
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