Australia To Experience Worst Economic Fallout Since Great Depression

Australia is expected to be hit with the biggest economic blow it has experienced since the Great Depression.

In the wake of the coronavirus pandemic The International Monetary Fund (IMF) warned Australia's economy would likely be one of the worst-hit in the Asian region as the world scrambles to contain the spread of Covid-19.

The IMF, in its 2020 World Economic Outlook report, predicted the Australian economy will shrink by 6.7 percent this year, or almost $130 billion.

This would mark the single largest blow to the economy since 1930, when it dwindled by 9.5 percent during the Great Depression.

Australia's unemployment rate is predicted to remain at an average of 7.6 percent, and could potentially stay this way for two years.

Overall, the organisation predicts the global economy will shrink by three percent during 2020 in a coronavirus-driven collapse of activity.

Several economies are already experiencing the fallout, but Australia is sitting in the bottom third of the world's top 20 largest economies.

The IMF forecasts economic contractions in the US (–5.9 percent), Japan (–5.2 percent), the UK (–6.5 percent), Germany (–7.0 percent), France (–7.2 percent), Italy (–9.1 percent), and Spain (–8.0 percent).

China, where the coronavirus outbreak peaked during the first quarter and business activity is resuming, will maintain positive growth of 1.2 per cent in 2020 -- a reduction from six percent growth in the IMF's January forecast.

The IMF does predict a partial rebound in 2021, with the world economy growing at a 5.8 percent rate, but said its forecasts were marked by "extreme uncertainty" and outcomes could be far worse, depending on the course of the pandemic.

"This recovery in 2021 is only partial as the level of economic activity is projected to remain below the level we had projected for 2021, before the virus hit," IMF chief economist Gita Gopinath said in a statement.

Under the fund's best-case scenario, the world is likely to lose a cumulative $US9 trillion in output over two years -- which is greater than the combined GDP of Germany and Japan.

The IMF's forecasts assume outbreaks of the novel coronavirus will peak in most countries during the second quarter and fade in the second half of the year, with business closures and other containment measures gradually unwound.

A second outbreak in 2021, which would trigger more closures, could cause a reduction of five to eight percentage points in the global gross domestic product baseline forecast for next year, keeping the world in recession for a second straight year.

"It is very likely this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago," the IMF said in its report.

"The Great Lockdown, as one might call it, is projected to shrink global growth dramatically."

With AAP.