UN slashes 2020 growth forecasts and says poverty and inequality will soar

Gross domestic product growth in developed economies is expected to plunge in the steepest dip since the Great Depression.

An Afghan women waits to receive cash assistance from German aid organiSation HELP in Herat, Afghanistan. Source: EPA

The world economy could shrink by 3.2 per cent this year amid the coronavirus pandemic, the United Nations says.

In the worst-case scenario, it could even contract by 4.9 per cent, according to the UN World Economic Situation and Prospects mid-year report.

Before the coronavirus outbreak, the UN expected world output to expand at a pace of 2.5 per cent in 2020.

Global economic output is expected to be slashed by nearly $US8.5 trillion ($A13.1 trillion) this year and next, wiping out much of the gains of the past four years, according to the new report.

Gross domestic product growth in developed economies is expected to plunge by up to 5 per cent this year, marking the sharpest contraction since the Great Depression in 1930s.

A homeless man sitting on a mattress reads newspaper, in Buenos Aires, Argentina. Source: EFE

The report warned that there is a strong possibility of a slow recovery and prolonged economic slump, with rising poverty and inequality.

The crisis will push an estimated 34.3 million people below the extreme poverty line this year, the UN said.

Next year could result in modest 3.4-per-cent growth, the report said.