Co-authored by former US Treasury Secretary Lawrence Summers and Harvard University economist David Cutler, it is published in the Journal of the American Medical Association.
They predict that total cost of the pandemic will be more than the money the US has spent on every war since September 11, 2001. Ongoing health costs for Covid-19 survivors are estimated at US$2.6t. The authors estimate reduced economic output will cost US$7.6t.
The global GDP outlook has improved slightly from the fall of 5.2 per cent the IMF forecast in June. But a slump of 4.4 per cent this year is much worse than the 0.1 per cent drop in 2009 during the economic recession.
And the pandemic appears to have at least another year to run overseas, having reached 38 million infections and more than a million deaths. A second late-stage vaccine trial has been paused. The World Bank has approved US$12 billion in financing to help developing countries buy and distribute vaccines, tests, and treatments.
The IMF praised governments for their willingness to spend big, propping up businesses and supporting jobs.
"The considerable global fiscal support of close to US$12t and the extensive rate cuts, liquidity injections, and asset purchases by central banks helped saved lives and livelihoods and prevented a financial catastrophe," said chief economist Gita Gopinath.
She said more is needed to boost the medical response to the pandemic and support economies as they try to recover. "It is essential that fiscal and monetary policy support are not prematurely withdrawn, as best possible," she said.
This is a key issue in the US where talks on new stimulus money are in a stalemate. Depending on the result of November's election, it could be a long wait until late January for any aid to get to citizens. Small businesses need help and extra jobless payments have run out. The travel and dining industries have been struggling. "If Congress doesn't act, the next president will inherit a real mess," said Harvard economist Jason Furman.
Not everyone is suffering. Bloomberg reports that the 50 richest Americans now hold almost as much wealth as half of the US. It says Covid-19 has increased inequality, with job losses striking service workers and the virus particularly infecting and killing minorities. Many professionals are working from home and benefiting from rising stock prices.
The IMF believes the US will do better this year than Europe with a 4.3 per cent contraction to a 8.3 per cent shrinkage for the eurozone.
At least the general approach to propping up economies and the robust action on the virus in several Asia-Pacific countries has blunted the overall damage. China is expected to see 1.9 per cent growth this year.
The technology-heavy handling of Covid-19 in South Korea, Taiwan and Singapore, combined with vaccines and social-distancing health measures, could provide a roadmap way out if combined.
How well the world bounces back next year will depend on how well the virus is contained.
