Economic carnage forecast as virus cases surge in US, Latin America

The IMF on Wednesday laid out the unprecedented economic devastation caused by the coronavirus pandemic, with $12 trillion forecasted to be wiped out worldwide, even as infections surge in Latin America and across large parts the US.

The International Monetary Fund said that this “crisis like no other” would send the global GDP plunging by 4.9 this year — and the prospects for recovery were steeped in “pervasive uncertainty”.

As many countries emerge from lockdowns hoping to resurrect their economies, the IMF warned that a second wave of infections could mean its already grim World Economic Outlook update underestimates the damage.

It said that many countries will face a recession more than double that which they suffered during the global financial crisis in 2008-2009.

The IMF forecast that China, where the virus emerged late last year, would be the only economy that grows this year, by just one percent.

The United States was forecast to shrink by eight percent, Germany slightly less, while France, Italy, Spain and Britain would all suffer double-digit contractions.

On top of erasing an astonishing $12 trillion (10.6 trillion euros) over two years, the report said the crisis would particularly affect low-income countries and households, as well as threatening progress made on reducing extreme poverty.

The number of Covid-19 deaths surged past 477,000 on Wednesday after doubling in less than two months, according to an AFP tally.

China said a new outbreak that has infected 256 people in Beijing since early June is “under control”, but fears remain over the risk of community transmission.

Experts warned that small, recurrent outbreaks of the virus were likely in future.

“There may be an increase in cases in the winter or next spring, but I don’t think the outbreak will be as big as the first wave of the pandemic,” leading Chinese respiratory expert Zhong Nanshan said.

While Europe has recorded the most deaths of any continent, it is reopening from lockdown after seeing the numbers of new cases and fatalities fall.

But Slovenia reinstated the mandatory use of masks in indoor spaces on Wednesday after recording a rise in cases.

It came a day after Germany reimposed restrictions on more than 600,000 people following a cluster of infections at a slaughterhouse.

And in Britain, medical experts warned the government to prepare for the “real risk” of a second wave just a day after the biggest lifting of measures yet in England.

Experts have also warned that an early summer heatwave across the continent could lead to a surge in infections as people hit beaches and parks while ignoring social distancing measures.

No masks were worn by participants — and few by spectators — at a huge parade in Moscow during World War II commemorations on Wednesday.

The pandemic also continues to cause havoc in global sports, with New York cancelling its famed marathon which had been planned for November 1.

World men’s tennis number one Novak Djokovic tested positive after an exhibition tournament in the Balkans, drawing widespread condemnation for organising the event.

Australia’s Nick Kyrgios labelled the incident pure “stupidity”, while Djokovic said he is “so deeply sorry” that the tournament “caused harm”.

The United States has recorded more deaths than any other nation, with more than 129,000 from nearly 2.5 million cases.

White House advisor Anthony Fauci warned the next two weeks would be “critical to our ability to address… surgings” in Florida, Texas and other states.

President Donald Trump, whose handling of the crisis has been widely criticised, meanwhile doubled down on comments that he wanted to slow testing because so many official infections made the US look bad.

“I don’t kid,” Trump said, after a White House official described his initial comments as just a joke.

A new poll on Wednesday showed rival Joe Biden with a 14-point lead over Trump ahead of November’s presidential election.

Latin America has been one of the world’s worst hotspots for weeks, and the number of deaths there and in the Caribbean surpassed 100,000 on Wednesday.

A federal judge meanwhile ordered President Jair Bolsonaro, who has famously compared coronavirus to a “little flu,” to wear a mask in public, after the far-right leader repeatedly flouted containment measures.

With no vaccine or treatment for Covid-19 available, the end of the crisis remains elusive.

“We are not out of the woods,” IMF chief economist Gita Gopinath said.

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