By Graeme Wearden and Jasper Jolly
Closing summary: World economy braces for depression
The International Monetary Fund today warned that the world faces its worst recession since the Great Depression of the 1930s – but stock markets appear to be fixated on a potential recovery.
Wall Street investors enjoyed a day of strong gains by the early afternoon in New York, with the S&P 500 up by 2.7% and the Nasdaq rising by 3.5%, aided by good news on a recovery in iPhone orders from China for Apple.
Here are some of the most important developments from today:
- In its new World Economic Outlook, the IMF slashed its growth forecasts dramatically, saying it expects the global economy to shrink by 3% this year, rather than expand by 3.3% as it thought back in January.
- The IMF also said there were “cracks” showing in the financial system that could cause a credit crunch – although that had not happened yet.
- G7 finance ministers and central bank chiefs say they “stand ready” to provide temporary debt relief to poorer nations whose finance ministries are struggling to pay for healthcare spending, but only if other creditors agree.
- The Office for Budget Responsibility said that the UK economy could shrink by a third during this quarter as the lockdown continues, and unemployment could hit 10. (Note it was a “scenario” rather than a forecast.)
- The FTSE 100 was the worst performer among major European stock markets. London’s benchmark lost 0.9% to close at 5,791 points.