IMF Downgrades Outlook for Global Economy Amid Pandemic

In this March 19, 2020 file photo, a deserted construction site is pictured in Dardilly, near Lyon, central France. The virus crisis has triggered the worst global recession in nearly a century -- and the pain is not over yet even if there is no second wave of infections, an international economic report warned Wednesday. (AP Photo/Laurent Cipriani, File)
In this March 19, 2020 file photo, a deserted construction site is pictured in Dardilly, near Lyon, central France. The virus crisis has triggered the worst global recession in nearly a century -- and the pain is not over yet even if there is no second wave of infections, an international economic report warned Wednesday. (AP Photo/Laurent Cipriani, File)
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IMF Downgrades Outlook for Global Economy Amid Pandemic

In this March 19, 2020 file photo, a deserted construction site is pictured in Dardilly, near Lyon, central France. The virus crisis has triggered the worst global recession in nearly a century -- and the pain is not over yet even if there is no second wave of infections, an international economic report warned Wednesday. (AP Photo/Laurent Cipriani, File)
In this March 19, 2020 file photo, a deserted construction site is pictured in Dardilly, near Lyon, central France. The virus crisis has triggered the worst global recession in nearly a century -- and the pain is not over yet even if there is no second wave of infections, an international economic report warned Wednesday. (AP Photo/Laurent Cipriani, File)

The International Monetary Fund has sharply lowered its forecast for global growth this year because it envisions far more severe economic damage from the coronavirus than it did just two months ago.

The IMF predicts that the global economy will shrink 4.9% this year, significantly worse than the 3% drop it had estimated in its previous report in April. It would be the worst annual contraction since immediately after World War II.

For the United States, the IMF predicts that the nation's gross domestic product - the value of all goods and services produced in the United States - will plummet 8% this year, even more than its April estimate of a 5.9% drop. This, too, would be the worst such annual decline since the US economy demobilized in the aftermath of World War II.

The IMF issued its bleaker forecasts Wednesday in an update to the World Economic Outlook it released in April. The update is generally in line with other recent major forecasts. Earlier this month, for example, the World Bank projected that the global economy would shrink 5.2% this year.

The IMF noted that the pandemic was disproportionately hurting low-income households, "imperiling the significant progress made in reducing extreme poverty in the world since 1990."

In recent years, the proportion of the world´s population living in extreme poverty - equivalent to less than $1.90 a day - had fallen below 10% from more than 35% in 1990. But the IMF said the COVID-19 crisis threatens to reverse this progress. It forecast that more than 90% of developing and emerging market economies will suffer declines in per-capita income growth this year.

For 2021, the IMF envisions a rebound in growth, so long as the viral pandemic doesn´t erupt in a second major wave. It expects the global economy to expand 5.4% next year, 0.4 percentage point less than it did in April.

For the United States, the IMF predicts growth of 4.5% next year, 0.2 percentage point weaker than in its April forecast. But that gain wouldn´t be enough to restore the US economy to its level before the pandemic struck. The association of economists who officially date recessions in the United States determined that the economy entered a recession in February, with tens of millions of people thrown out of work from the shutdowns that were imposed to contain the virus.

The US government has estimated that the nation´s GDP shrank at a 5% annual rate in the January-March quarter, and it is widely expected to plunge at a 30% rate or worse in the current April-June period.

In its updated forecast, the IMF downgraded growth for all major countries. For the 19 European nations that use the euro currency, it envisions a decline in growth this year of 10.7% - more than the 8% drop it predicted in April - followed by a rebound to growth of 6% in 2021.

In China, the world´s second-largest economy, growth this year is projected at 1%. India´s economy is expected to shrink 4.5% after a longer period of lockdown and a slower recovery than was envisioned in April.

In Latin America, where most countries are still struggling to contain infections, the two largest economies, Brazil and Mexico, are projected to shrink 9.1% and 10.5%, respectively.

A steep fall in oil prices has triggered deep recessions in oil-producing countries, with the Russian economy expected to contract 6.6% this year and Saudi Arabia´s 6.8%.

The IMF cautioned that downside risks to the forecast remain significant. It said the virus could surge back, forcing renewed shutdowns and possibly renewed turmoil in financial markets similar to what occurred in January through March. The IMF warned that such financial turbulence could tip vulnerable countries into debt crises that would further hamper efforts to recover.

Its updated forecast included a downside scenario that envisions a second major outbreak occurring in early 2021. Under this scenario, the global economy would contract again next year by 4.9%, it estimates.



Saudi Arabia Launches Operations Room to Tackle Financial Fraud

An aerial view of Riyadh, Saudi Arabia (SPA)
An aerial view of Riyadh, Saudi Arabia (SPA)
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Saudi Arabia Launches Operations Room to Tackle Financial Fraud

An aerial view of Riyadh, Saudi Arabia (SPA)
An aerial view of Riyadh, Saudi Arabia (SPA)

Saudi Arabia’s cabinet, chaired by Crown Prince Mohammed bin Salman, has approved the creation of a dedicated operations room to receive and process financial fraud reports, in a move seen as a significant step forward in the Kingdom's fight against financial crime.
The initiative aims to strengthen the national security framework, improve response efficiency to financial risks, and boost investor confidence—key factors in enhancing the appeal of the Saudi market to international and domestic stakeholders.
The decision is part of broader efforts by the Kingdom to tackle financial fraud at both national and international levels, aligning with global standards and best practices.
Saudi legal and financial experts say the Kingdom’s decision to establish the operations room marks a transformative shift in the institutional framework for combating financial crime, with a direct executive role expected to accelerate response times and enhance criminal investigation efforts.
Speaking to Asharq Al-Awsat, experts said the move will bolster transparency and trust in Saudi Arabia’s financial system, helping to attract both domestic and foreign investment and reinforcing the country’s position as a secure economic hub.
Abdullah Alsahli, a core member of the Saudi Bar Association, described the cabinet's decision as a “pivotal step” in developing the Kingdom’s financial protection system and a practical move toward strengthening financial security and shielding the national economy from cross-sector financial crimes.
“This operations room—expected to be launched soon—will not just serve as another reporting channel, but will function as a high-level executive arm working in coordination with oversight bodies, foremost among them the Saudi Central Bank,” Alsahli said.
He explained that the room’s most notable feature is its direct link to victims of fraud, allowing individuals to report cases without having to go through lengthy banking or institutional procedures. This, he added, will ensure faster response to incidents as they occur.
“The significance of this room lies in its integration with an executive body empowered to conduct investigations and criminal tracking. It allows financial crimes to be addressed not only from a regulatory or administrative standpoint, but also from a judicial and security perspective,” Alsahli noted.
From a legal standpoint, Alsahli said the creation of the operations room represents a qualitative leap in the institutional fight against financial fraud. It introduces a parallel mechanism to the oversight role of the central bank and financial institutions, but with a distinct focus on investigation and prosecution.
“This shift means that fraud reports will no longer be limited to internal financial settlement procedures. Instead, they will be handled directly by competent bodies specialized in investigation, monitoring, and forensic analysis—enhancing deterrence and reducing leniency in fraud case handling,” he said.