COVID-19 Will Have a 'Catastrophic' Impact on Unemployment: IMF

The International Monetary Fund (IMF) said Wednesday that the COVID-19 pandemic will have a "more negative impact" than expected on the world economy, which will also affect unemployment rates.

RELATED:
Pandemic Will Hit Global Economy Hard, IMF Alerts

The IMF now estimates a contraction of 4.9 percent in global GDP (gross domestic product) in 2020, lower that the three percent drop it predicted back in April.

“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast,” the IMF said in its World Economy Outlook update.

The IMF said that “the steep decline in (economic) activity comes with a catastrophic hit to the global labor market,” indicating that the global decline in work hours in the second quarter of the year is likely to be equivalent to a loss of more than 300 million full-time jobs.

“The hit to the labor market has been particularly acute for low-skilled workers who do not have the option of working from home. Income losses also appear to have been uneven across genders, with women among lower-income groups bearing a larger brunt of the impact in some countries,” the IMF said.

The IMF also cautioned that the forecasts, for now, are surrounded with unprecedented uncertainty and economic activity will depend on factors such as the length of the pandemic, voluntary social distancing, changes to global supply chains, new labor market dynamics.

There have been more than 9 million confirmed infections worldwide from COVID-19, according to Johns Hopkins University. The United States, Brazil, and Russia are currently the nations with the highest number of cases globally.