The International Monetary Fund predicts the world is heading towards a massive financial crisis, eclipsing the Great Depression that struck 90 years ago.
Bitcoin, which was born during the last global financial crisis of 2008, will face an unprecedented challenge to prove that it meets its primary purpose – surviving and ultimately thriving with a fixed supply while government interventions and traditional monetary policies trigger widespread money printing.
At a press briefing on Tuesday, IMF chief economist Gita Gopinath said that the magnitude and speed of the current collapse brought on by the loss of life and economic disruption due to the coronavirus is “unlike anything we’ve experienced in our lifetimes.”
At the same time, Gopinath argues that there is too much uncertainty to determine the road ahead as the crisis afflicts most countries, taking a toll on human life and the global economy.
Says Gopinath,
“There is substantial uncertainty on the impact it will have on people’s lives and livelihoods. A lot will depend on the epidemiology of the virus, the effectiveness of containment measures and the development of therapeutics and vaccines – variables which are very hard to predict.”
That difficulty withstanding, Gopinath’s analysis concludes that the “Great Lockdown” will be far worse than the global financial crisis of 2008 and will deal the heaviest economic blow since the Great Depression.
As a result of the pandemic, the IMF expects the global economy to contract sharply: –6% in 2020.
“For 2020, growth in advanced economies is projected at -6%. Emerging market and developing economies, which typically have normal growth levels well above advanced economies are also projected to have negative growth of -1% and -2.2%, if you exclude China.”
Income per capita for over 170 countries is also projected to shrink, says Gopinath, with a recovery delayed until 2021 due to pressure and fallout from the coronavirus pandemic playing out throughout the year, restricting commerce, limiting normal activities and sparking higher levels of unemployment.
Johns Hopkins reports that there are nearly two million confirmed cases of coronavirus worldwide.
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