In brief

  • Coronavirus crisis will be worst since Great Depression, predicts IMF.
  • Global growth will shrink to minus three percent in 2020.
  • This could hurt Bitcoin.

The International Monetary Fund has made its economic predictions for the “Great Lockdown 2020.” The fallout will be “far worse” than the financial crisis of 2008, and “the worst recession since the Great Depression.” 

In April’s World Economic Outlook, the IMF predicted that global growth in 2020 will fall to minus three percent, a drop of 6.3% since January 2020. We’re in for a big shock: around nine trillion of the global gross domestic product will be lost to the pandemic, “greater than the economies of Japan and Germany, combined,” said the IMF. 

 

On the assumption that the world recovers in the second half of 2020, the IMF predicts that global growth in 2021 will rebound to 5.8%. But if the pandemic continues into 2021, global GDP will fall by an additional eight percent. 

Of the debate between saving coronavirus patients and restarting the economy, the IMF thinks, “there is no trade-off between saving lives and saving livelihoods. Countries should continue to spend generously on their health systems, perform widespread testing, and refrain from trade restrictions on medical supplies.”

“This is a truly global crisis as no country is spared,” said the IMF, which added that income per capita is likely to shrink for citizens of 170 countries. Bitcoin, whose network is distributed across thousands of computers worldwide, likely won’t be unaffected either.

Bitcoin’s already been shown to track major global indices. Last month, Bitcoin’s price halved in a matter of days when the stock markets crashed.

The IMF has made a stark warning about the effects of the coronavirus. Image: Shutterstock.

On Monday, when the stock market closed, and the Dow Jones ended 300 points in the red, cryptocurrencies shed $3 billion in combined market cap—a total of $10 billion lost since Sunday.

Should this trend continue, Bitcoin could be negatively affected. Although a Coinbase report has cast doubt on the correlation.

Bitcoin was created amid the 2008 global financial crisis. Will the coronavirus crisis give it a greater reason to exist or will it show its weaknesses?

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