The International Monetary Fund on Thursday slashed its economic forecasts for world markets, foreseeing that global gross domestic product will shrink by 4.9% in 2020 due to the coronavirus outbreak.
"The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated," the IMF's World Economic Output report said, adding that the global economy is likely to rebound by 5.4% in 2021.
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"For the first time, all regions are projected to experience negative growth in 2020," the report said, noting that advanced economies will contract by 8% in 2020, and they will recover, adding 4.8% next year.
Israel's economy, regularly lauded for being one of the most stable in the world, was forced to slow down to about 15% activity as the public and private sectors were shuttered in early March in an effort to stem the spread of COVID-19.
While Israel has been gradually resuming economic activity over the past few weeks, the coronavirus crisis has triggered unprecedented unemployment of 26% – compared to 4% prior to the outbreak.
The government has approved an unprecedented 100 billion shekel ($28 billion) bailout plan to help the economy weather the crisis. Still, the Bank of Israel predicted that the budget deficit for 2020 will amount to NIS 150 billion ($43 billion) or 11.5% of the gross domestic product.
The IMF predicted that the Israeli economy will shrink by 6.3% in 2020, adding it does not believe Israel's GDP would be able to return to its pre-pandemic level until 2022.
According to the IMF, the US's GDP is expected to drop by 8% in 2020, Europe's economy will contract by 10.2%, and the GDP of the group of nations defined as Emerging Market and Developing Economies will decline by 3%.
Major EU economies – Germany, France, Italy, and Spain – will see their GDP shrink by 7.8%, 12.5%, 12.8%, and 12.8%, respectively, according to the report.
Russia's economy is forecast to shrink by 6.6% in 2020 and rebound by 4.1% in 2021.
Overall, the coronavirus pandemic will cause global trade to narrow by 11.9%, the IMF said.
"Beyond the pandemic, policymakers must cooperate to address the economic issues underlying trade and technology tensions as well as gaps in the rules-based multilateral trading system," the Washington-based organization noted.
"Consistent with the gradual pickup in domestic demand next year, trade growth is expected to increase to 8%," it said.
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