June 24 (UPI) -- The International Monetary Fund sharply lowered its forecast for this year's world economic growth Wednesday, citing worse-than-expected challenges posed by the coronavirus pandemic.
IMF had predicted a 3 percent decline in the global economy for 2020 in its April World Economic Outlook, but significantly lowered that estimate to nearly 5 percent in the June outlook issued Wednesday.
The United Nations agency also scaled back a predicted economic rebound for 2021, lowering its forecast from 5.8 percent growth to 5.4 percent.
The IMF is projecting "a deeper downturn in 2020 and a slower recovery in 2021," said Chief Economist Gita Gopinath.
The downward revision, she said, "reflects the fact that in the first half, economic outcomes came in somewhat worse than we had anticipated. And because there is no medical solution, we are expecting social distancing to persist for a longer time into the second half of this year."
Economies were hit harder than expected, with evidence showing people began to isolate at home voluntarily even before official lockdowns were imposed. This also suggests there will be a more gradual recovery in the second half as fear of contagion is likely to continue, IMF analysts said.
The new estimates, they cautioned, are subject to "tremendous uncertainty" because it is unknown if there will be a breakthrough on vaccines or effective treatments on the positive side, or a second wave of the pandemic on the negative side.
GDP contractions in economically advanced nations were projected at 8.0 percent in 2020, nearly 2 percentage points lower than in the April forecast.
Deep downturns were forecast for the United States (8 percent), Japan (5.8 percent), Britain (10.2 percent), Germany (7.8 percent), France (12.5 percent) and Italy and Spain (12.8 percent each).
Economies are now expected to rebound in the advanced nations by 4.8 percent in 2021, leaving GDP for the group about 4 percent below its 2019 level.