Countries with Lowest GDP Growth 2020

"This crisis is like no other," wrote chief economist Gita Gopinath in the foreword to the April 2020 edition of the IMF's World Economic Outlook: "A pandemic scenario had been raised as a possibility in previous economic policy discussions, but none of us had a meaningful sense of what it would look like on the ground and what it would mean for the economy."

This is what it means: the global economy is projected to contract by 3% in 2020, making this the worst recession since the 1930s and surpassing that of the 2008 global financial crisis. Emerging market and developing economies, the economists at the fund note, are expected to decrease slightly less: excluding China, on average, by -2.2%. Yet with more people living close to the international poverty line, these nations will suffer the greatest consequences in terms of extreme poverty. For them, the challenges of this crisis will be the most severe and will include health shocks, acute tightening in global financial conditions and a collapse in external demand. Based on these estimates, the World Bank has calculated that the pandemic is likely to cause the first increase in global poverty in more than two decades, pushing about 16 million people into poverty in South Asia, 23 million in Sub-Saharan Africa and more elsewhere.

Economies already in tatters will bear the brunt of the crisis. Sudan and Yemen owe their ranking amongst the slowest-growing nations in the world to years of war and sectarian conflict. Nature can also play a role in grinding an economy to a halt: like all Caribbean countries, Puerto Rico was already experiencing a significant slowdown when it was hit by Hurricane Maria in 2017 and by a series of earthquakes beginning in late December last year. Another factor that can hinder growth is lack of financial preparedness: in San Marino and Greece, the global financial crisis—compounded with fiscal difficulties and problems in the banking sector—contributed to negative GDP rates. In the meantime, oil and gas producers such as Venezuela, Trinidad and Tobago, as well as Libya and Equatorial Guinea, did not have large enough buffers when commodity prices began to decline.

It certainly would be tempting to think that negative and zero growth are maladies more likely to affect the smallest and most fragile global players. However, it is often the opposite: not only many small emerging nations rank among the fastest-growing economies in the world, but among those countries that in recent years have been falling behind one can find most Mediterranean EU members, as well as a surprises such as Finland, Japan and Germany.

While getting the recipe for prosperity down to a science, especially in these difficult times, is incredibly tricky, looking ahead there are still some reasons for optimism. Assuming that the pandemic will fade in the second half of the year and that the economic activity will gradually normalize, the global economy is projected to rebound by 5.8% in 2021. Furthermore, when the world faced a crisis of this magnitude in the 1930s, there was no multilateral economic system and countries had to compete against each other to find resources to prop their growth.  Today, Gopinath says, there is a stronger safety net: "The IMF is determined to help".

Source: International Monetary Fund, World Economic Outlook April 2020.