(Bloomberg) — The guardians of the global economy will gather this week under the cloud of the worst recession since the Great Depression, and a recovery dependent on scientists finding a coronavirus vaccine.

The International Monetary Fund and World Bank will hold their annual meetings, with both calling on the Group of 20 largest economies to extend a freeze in debt payments from the world’s poorest nations that’s set to expire at year end.

While the fund last month flagged a “small upward revision” to its 2020 growth forecast from its June outlook, it warned the rebound will be long and uneven.

chart, line chart: Goodbye V, Hello L

© Bloomberg
Goodbye V, Hello L

The IMF has been encouraging governments to spend whatever they need to confront the crisis, even while warning that debt as a percentage of GDP will rise to about 100% for the first time.

Fund officials earlier this month proposed reforms to debt restructuring for countries that struggle to meet obligations, a burden likely to rise as the pandemic batters economies. Debt vulnerabilities will be a key theme of the meetings, according to first deputy managing director Geoffrey Okamoto.

The G-20 agreed in April to waive billions of dollars in repayments by poorer nations until the end of the year under the Debt Service Suspension Initiative. The World Bank says this isn’t enough and wants borrowings reduced to prevent a bigger fallout.

chart: IMF Power Players

© Bloomberg
IMF Power Players

The IMF has also been working to figure out how to transfer existing reserve assets known as special drawing rights from rich countries that don’t need them to poorer nations that do. A proposal to create $500 billion in SDRs was blocked in April by the U.S., the fund’s biggest shareholder, which criticized the plan as inefficient.


Load Error

What Bloomberg’s Economists Say…

“With the

(Bloomberg) — The global economy is entering the final quarter of its worst year in living memory in a precarious state with the coronavirus threatening to wreak yet more destruction on labor markets.


Load Error

The darkening outlook for U.S. employment, the impending halt to a U.K. furlough and the expiry of a moratorium on German insolvencies provide a glimpse of the trouble in store. The International Labour Organisation estimated recently that the world would lose working hours equivalent to 245 million full-time jobs in the last three months of 2020.

The quarter began with a portent as blue-chip employers from Walt Disney Co. to Royal Dutch Shell Plc and Continental AG announced tens of thousands of staff cuts within a 24-hour period. Then on Friday, the U.S. Labor Department revealed slowing job gains in September, with many Americans giving up on looking for work.

Adding to those omens, the U.K.’s main furlough program will end later this month, and a group representing the country’s events industry predicts more than 90,000 people will be made redundant in coming weeks.

Renewed clusters of infections underscore the vulnerability of already battered economies to further damage that could ultimately hit livelihoods. The latest outbreak in Paris may force bars and restaurants to close, while London is at a “tipping point,” according to a local health official.

What Bloomberg’s Economists Say…

“A second wave of infections, major corporate layoffs in the U.S. and the end of the furlough scheme in the U.K. flag the risk unemployment will rise into year-end. Bad news for the immediate outlook is also bad news for the medium term, with deeper labor market scars threatening to drag on the recovery — even after a Covid-19 vaccine is eventually found.”

–Tom Orlik, chief economist

Click here for what happened last