WASHINGTON, Mar 31 (Reuters) – Global economic output would be 3% lower in 2024 than projected before the COVID-19 pandemic, but its impact in the medium term will not be as severe as that of the global financial crisis in 2008-09, the International Monetary Fund said Wednesday.
The IMF maintained that the prospects for “scars” by the current crisis remain substantial, even if the stress on the financial system and the associated long-term economic damage have been largely avoided thanks to unprecedented measures taken. .
The road to recovery would remain difficult, especially for countries with limited fiscal resources, the IMF warned in a blog post based on its updated Global Economic Outlook.
“Unlike what happened in the global financial crisis, emerging market and developing economies would have deeper scars than advanced economies, with losses feared to be worse in low-income countries,” he said.
Economies that are more dependent on tourism or have a greater share of high-touch sectors such as restaurants and retail are projected to have more persistent losses, the IMF said.
This was true for the Caribbean or Pacific Islands, where Gross Domestic Product is estimated to be 10% lower in 2024 than pre-pandemic projections, he said.
The COVID-19 hit could also have a greater impact on the labor market in the medium and long term, as some of those high-touch sectors may contract permanently, the Fund added.
He said productivity could also be adversely affected by decreased competition if dominant companies further increase their market power.
The IMF will release the full World Economic Outlook and updated growth projections on April 6.
(Reporting by Andrea Shalal; Edited in Spanish by Janisse Huambachano)