The International Monetary Fund’s current analysis shows how suddenly and how hard the crisis has hit the global economy in recent weeks. The IMF experts have revised their expectations for global economic growth by more than 6 percentage points since the last forecast in January. Whereas at the beginning of 2020 they were still expecting a global expansion rate of more than 3 percent for the current year, they now expect economic output to slump by 3.0 percent.
This is by far the most severe recession of the post-war period. If one excludes the two world wars, one has to go back to the Great Depression at the end of the 1920s to find a comparably deep cut in economic life. However, in many respects we are now dealing with a crisis of a completely different type. It is not the end of a boom with the usual overheating, but a deliberate standstill of large parts of economic life. The economic and monetary policy response is also fundamentally different today than it was a century ago.
In the meantime, the first data have become available that illustrate the severity of the shock. For example, data on electricity consumption in European countries show how much economic activity has had to be curtailed in recent weeks. Unsurprisingly, Italy shows the largest decline, followed by Spain, Belgium and France. The data for Germany give reason to hope that the recession in this country may not be as deep as in some neighbouring countries.