IMF predicts recession:Depression,Stagflation
In the shadow of the COVID-19 pandemic and its continuing impact, the global economy could see a “somewhat less severe, though still deep” recession through 2020, the International Monetary Fund (IMF) has projected in its latest global economic outlook. Global growth is now projected at -4.4 per cent in 2020
LEARNING FROM HOME/WITHOUT CLASSES/BASICS
The IMF, was conceived at a UN conference in Bretton Woods, New Hampshire, United States, in July 1944. The 44 countries at that conference sought to build a framework for economic cooperation to avoid a repetition of the competitive devaluations that had contributed to the Great Depression of the 1930s.
The IMF’s responsibilities: The IMF’s primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. The Fund’s mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability.
Headquarters: Washington, D.C.
CEO: Ms. Kristalina Georgieva, from Bulgaria
The IMF works hand-in-hand with the World Bank. Both are also known as Bretton Woods twins. and although they are two separate entities, their interests are aligned, and they were created together. While the IMF provides only shorter-term loans that are funded by member quotas, the World Bank focuses on long-term economic solutions and the reduction of poverty and is funded by both member contributions and bonds. The IMF is more focused on economic policy solutions, while the World Bank offers assistance in such programs as building necessary public facilities and preventing disease.
Recession is a slowdown or a massive contraction in economic activities; economic indicators such as GDP, corporate profits, employments, industrial production, real income, and wholesale-retail trade etc., fall; short-term fluctuations when major macroeconomic indicators have shown slowdowns or even outright declining performance.
Economies generally react by loosening their monetary policies by infusing more money into the system, i.e., by increasing the money supply.
A depression is a deep and long-lasting recession; a severe decline that lasts for many years.
Stagflation is a combination of stagnant economic growth, high unemployment, and high inflation. It creates slow economic growth or a recession, high unemployment, and rising prices. Stagflation is caused by conflicting contractionary and expansionary fiscal policies
Inflation reduces the purchasing power of each unit of currency, which leads to increases in the prices of goods and services over time.; means you have to spend more to fill your gas tank, buy milk. In other words, it increases your cost of living. Central Banks uses monetary policy to manage inflation.