The governments need to continue to provide support given the depth of the damage from the virus, which caused massive unemployment as well as more than a million deaths, the International Monetary Fund analysts emphasised.
Global growth is expected to slow to 3.5 percent in the medium term, a stunning $28 trillion in lost output in the five-year period through 2025 compared to the pre-pandemic expectations stated the Fund's chief economist Ms. Gita Gopinath on Wednesday.
"This is the worst crisis since the Great Depression, and it will take significant innovation on the policy front, at both the national and international levels, to recover from this calamity," Gopinath said.
While most countries will see their economies return to pre-pandemic levels by 2022, some, like those in Latin America, will not see a recovery until 2023, she told reporters.
Countries like India, Spain and Italy will suffer double digit economic declines in 2020, while Britain just misses that threshold with a 9.8 percent contraction, the IMF analysts assessed in its latest World Economic Outlook report.
Correct Economic Policy in the US Can Aid in Global Recovery
The high stimulus in the United States could have "significant benefits for the world" , the IMF economist stated.
Another US stimulus package on the order of the $2.2 trillion CARES Act approved in March would increase growth in the world's biggest economy by two percentage points next year, over the 3.1 percent GDP rise currently forecast.
Ms Gopinath stated defeating the virus remains critical "but if we can end the health crisis sooner, and we can continue to provide income support to households, and we can prevent excessive bankruptcies and job destruction, then we can have a somewhat faster recovery."
In addition, poor countries will need concessional financing as well as debt relief.
Even once the immediate crisis has passed, the IMF warned that "most economies will experience lasting damage to supply potential, reflecting scars from the deep recession this year."
The World Bank said up to 150 million more people may be pushed into extreme poverty by 2021, the first time it has worsened in more than two decades, while the IMF warns the crisis will exacerbate inequality,