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<\/picture><\/div>\n<\/div>\n<\/div>\nThe global economy will this year likely suffer the worst financial crisis since the Great Depression, the International Monetary Fund<\/a> said Tuesday, as governments worldwide grapple with the Covid-19 pandemic<\/a>.<\/p>\n The Washington-based organization\u00a0now expects the global economy to contract by 3% in 2020. By contrast, in January it had forecast<\/a> a global GDP (gross domestic product) expansion of 3.3% for this year.<\/p>\n \u201cIt is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago,\u201d Gita Gopinath, the IMF\u2019s chief economist, said in the latest World Economic Outlook report.<\/p>\n The dramatic downgrade in this year\u2019s growth expectations comes as other institutions also warn that the coronavirus outbreak is bringing massive economic challenges. The World Trade Organization said last week that global trade will contract<\/a> by between 13% and 32% this year. The Organization for Economic Coordination and Development has also warned the economic hit from the virus will be felt \u201cfor a long time to come<\/a>.\u201d<\/p>\n To contain the spread of the virus, many governments have implemented lockdown measures, only allowing people to leave their houses to purchase groceries, medicines and, in some cases, to exercise. As a result, business activity has stalled in many countries.<\/p>\n The IMF, which dubbed the current crisis \u201cthe Great Lockdown,\u201d said \u201cthis is a crisis like no other.\u201d\u00a0Speaking at a press conference, Tuesday, Gopinath explained \u201cthe magnitude and speed of collapse in activity that has followed (the lockdown) is unlike anything we\u2019ve experienced in our lifetimes.\u201d<\/p>\n There\u2019s severe uncertainty about the duration and intensity of the economic shock, it added, and stimulating economic activity is more challenging given the required social distancing and isolation policies.<\/p>\n The IMF said it had received \u201can unprecedented number of calls for emergency funding.\u201d Out of its 189 members, more than 90 of them have asked for financial support.<\/p>\n The fund, which provides financing to members which are struggling economically, has $1 trillion in lending capacity.<\/p>\n<\/div>\n The latest forecasts from the IMF suggest that the\u00a0U.S. economy will contract by 5.9% this year. In comparison, the euro zone is expected to shrink by 7.5%, but\u00a0China is seen growing by 1.2% in 2020.<\/p>\n The economic situation will be particularly difficult in Italy and Spain, where GDP is set to contract by 9.1% and 8%, respectively.\u00a0These two countries are the worst hit in Europe by Covid-19. Both have higher numbers of infections and deaths than China, where the virus first emerged in late 2019.<\/p>\n<\/div>\n The IMF is advising countries to focus on the health crisis first, by spending on testing, medical equipment and other health care related costs.<\/p>\n It also said that governments should provide tax deferrals, wage subsidies and cash transfers to the most-affected citizens and firms; as well as to prepare for the lifting of lockdown measures.<\/p>\n![\"20200414](\"https:\/\/image.cnbcfm.com\/api\/v1\/image\/106460301-158685671992720200414bendingthecurveallcountriestotalcases.png?v=1586856742&w=740&h=416\")
<\/picture><\/div>\n<\/div>\n<\/div>\nEuro zone to be hit the hardest<\/h2>\n
How should governments react?<\/h2>\n