On today's episode I'll be speaking

with the International Monetary Fund's

chief economist Gita Gopinath.

The IMF has just produced its latest forecast

for the global economy

and they're pretty bleak.

It's expecting the global economy

to shrink by three percent this year.

That would be the steepest global reduction

since the Great Depression,

certainly worse than anything that happened

in the global financial crisis.

Gita Gopinath, looking at these forecasts,

I noticed that you have your baseline scenario

for the global economy

and then everything else,

all the alternatives are worse.

What's driving the IMF's forecast

that we're heading for this economic contraction

and why do you think that all the alternative scenarios

could be even worse?

So our baseline assumes

that the pandemic and the containment measures

will peak in the second quarter

for most countries in the world

and then come off gradually in the second half.

But clearly that's not a given

and talking to epidemiologists

and public health officials,

there's certainly no certainty that'll happen.

Now there are some countries where you are seeing

containment measures working

and there is a flattening of the curve

and the number of new cases are coming down.

But it's still too early to say,

which is why we look into these other scenarios

where the containment measures

need to go into the second half of this year

and even into 2021.

And if that happens,

then it will be doubling of the downturn

which is from three percent,

a negative three percent to negative six percent in 2020

and almost no recovery then in 2021.

So it would be much worse.

Does the IMF need new tools

to deal with this crisis,

help emerging market economies

get the support they need

or is it just about scaling up what you already have?

At the IMF, we've had close to 100 countries

come to us for financing needs.

Just in the last how long?

Well, in the last four weeks,

a total of about 100.

So it's a very large number coming in a very short time.

I don't think we've had 100 countries come to us before.

So this is unprecedented

and then of course the speed at which

is even more unprecedented.

Globally, we've seen governments and central banks

do all they can very quickly

to limit the damage done

by the shutdown of the economy

to defeat the virus.

Despite all that extraordinary effort,

how worried are you about the permanent damage

to the economy and to society

that might come from this crisis?

I think there is a substantial risk in that.

This is a crisis that's affecting

small and medium enterprises

along with some of the big ones

and getting to them is much harder.

There is a lot to be concerned about here.

Another thing I would want to flag

is that while in the past when there's been a crises

and you have all the stimulus in the system,

it is a stimulus,

which means you want people to go out and spend,

you want folks to invest now,

but that's not what the other side of this crisis is,

which is a health crises.

And at the same time

all of this stimulus is in the system

we want people to stay at home

and not exactly go out and spend.

So it's a very different transmission channel

- -

The hope is that you will keep people

with sufficient income

so that they can meet their needs,

that firms and businesses can stay afloat,

that once we get past this period of lockdown,

that things would recover much faster.

But the economic landscape

will look very different

once we come out of this lockdown.

And I think there is tremendous uncertainty.

Gita Gopinath, chief economist of the IMF,

thank you very much.

Thank you, Stephanie.

on inequality and the economic cost of inequality

in recent years

and we've certainly seen the impact of the crisis,

the big difference between employees and big companies

who perhaps have quite strong employment rights

and those in the gig economy

who don't have that job security,

bearing the brunt of this crisis.

Do you think there'll be a new focus on those inequalities

after this crisis?

For countries to come out of this really grim situation,

and this is true for all countries in the world,

it's going to be important to get everybody

to be able to survive this crises and to come out whole

at the other end.

And so having this kind of inequality

which leads to permanent losses of income,

people coming out losing out of the labor force

where they can't maintain basic livelihoods

doesn't help anybody.

It doesn't help even from just a pure world perspective.

So I think absolutely,

I think it's very important for the world

to ensure that there are again I would say

automatic systems in place

that get triggered whenever something like this happens

to ensure that people get the support that they need

and also to make sure

that in normal times,

that there is an equitable distribution

of income in the world.