Coronavirus economic updates: IMF predicts the worst recession since the Great Depression

(NEW YORK) — The coronavirus pandemic has quickly evolved from a health care crisis to a financial one, shuttering businesses, upending industries and sending financial markets reeling.

Here’s the latest news on how the COVID-19 crisis is affecting the economy. For more on financial resources available during the pandemic, click here.

Here’s how the day is unfolding. Please refresh for updates.

Financial markets see opening spike

U.S. financial markets rallied on Tuesday, with the Dow Jones Industrial Average spiking more than 550 points, or approximately 2.5%.

The S&P 500 rose 2.4% and the Nasdaq was up nearly 3% in early trading.

Investors seemed to welcome signs that parts of the economy were preparing to reopen and the pandemic was near its peak.

In Europe, a limited number of stores and small businesses were allowed to reopen Tuesday in Italy.

In the U.S., governors on both coasts announced they were working on plans to allow businesses to resume.

IMF calls ‘Great Lockdown’ worse than ‘the worst recession since the Great Depression’

The International Monetary Fund released its 2020 World Economic Outlook on Tuesday, projecting the global economy will contract by 3% as a result of the COVID-19 pandemic, a steeper decline than the 2008-2009 financial crisis.

The group forecast that the cumulative loss to the global GDP from 2020 to 2021 as a result of the pandemic could be approximately $9 trillion, or more than the economies of Japan and Germany combined.

Gita Gopinath, the economic counsellor and director of research at the IMF, referred to the contraction as “the Great Lockdown” in a blogpost, saying it will be “the worst recession since the Great Depression, and far worse than the Global Financial Crisis.”

“This is a truly global crisis as no country is spared,” Gopinath wrote. “Countries reliant on tourism, travel, hospitality, and entertainment for their growth are experiencing particularly large disruptions.”

Gopinath added that emerging markets and developing economies “face additional challenges with unprecedented reversals in capital flows as global risk appetite wanes, and currency pressures, while coping with weaker health systems, and more limited fiscal space to provide support.”

On Monday, the IMF also announced it would provide debt relief to 25 countries through its Catastrophe Containment and Relief Trust.

“This provides grants to our poorest and most vulnerable members to cover their IMF debt obligations for an initial phase over the next six months and will help them channel more of their scarce financial resources towards vital emergency medical and other relief efforts,” Kristalina Georgieva, the managing director of the IMF, said in a statement.

The CCRT can provide up to $500 million in “grant-based debt service relief,” Georgieva added. Among the countries to receive the debt relief are Afghanistan, Sierra Leone and Yemen.

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