IMF Says U.S. Economy Contracted By 37% In The Second Quarter Of 2020

Matty-Sways

The IMF warns that shutting down businesses again following the resurgence of Covid-19 cases will be bad for the economy

The International Money Fund (IMF) warned on Friday that a resurgence of Covid-19 cases would be the biggest threat to the recovery of the US economy, according to News 18.

The US economy dropped 37 percent during the second quarter amid the shutdown from the pandemic. Now that businesses are reopening despite continued growth in case numbers, there are fears that shutting down again will continue to hurt the economy. In its annual Article IV report on the US economy, the IMF said the US government needs to provide support to households to boost the economy, warning that shutdowns will stymie any recovery:

"The principal risk, and one that is the most difficult to quantify, is that a resurgence in the number of COVID-19 cases in the US could lead to renewed, partial shutdowns."

The IMF said that the economic impact of the pandemic is most significant on low-income minorities, who will need to be supported the most as the economy recovers:

"There are already urgent warning signs that the depth of the economic contraction and the sectoral distribution of economic losses will lead to a systemic increase in poverty."

The IMF concluded: "The US has fiscal space and it should be deployed quickly to hasten the recovery from the second quarter contraction, permanently improve the social safety net, and facilitate a broader remaking of the US economy.”

Read the full report.

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