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The coronavirus crisis will leave lasting scars on the global economy and most countries should expect their economies to be 5 per cent smaller than planned even after a sharp recovery in 2021, the IMF said on Tuesday.

Forecasting that this year would be the worst global economic contraction since the Great Depression of the 1930s, Gita Gopinath, the fund’s chief economist, said the world outlook had “changed dramatically” since January with output losses that would “dwarf” the global financial crisis 12 years ago.

“A partial recovery is projected for 2021, with above-trend growth rates, but the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound,” she said.

Separately, the IMF has granted an estimated $214m in debt relief to 25 of the world’s poorest countries by cancelling repayments owed to the fund for the next six months, allowing them to use the money to fight coronavirus instead. (FT)

Coronavirus digest

  • Amid the pandemic, Japan’s large regional bank sector is especially vulnerable to a credit-cost spike.

  • GlaxoSmithKline and Sanofi, two of the world’s biggest vaccine makers, are working to develop a Covid-19 vaccine.

  • President Trump and New York Gov. Andrew Cuomo clashed over reopening states’ economies.

  • Migrant workers in Mumbai protested the extended lockdown on Tuesday, while Police in Wuhan broke up a group of retailers demanding rent relief. (FT, Wall Street Journal)

In the news

Obama endorses Biden’s 2020 campaign Barack Obama has endorsed Joe Biden for president, touting his former vice-president’s steadfast character and experience as he urged supporters of Bernie Sanders to rally behind the presumptive Democratic nominee. (FT)

Oil prices continue to slide Oil prices remained under pressure on Tuesday, dipping below $30 a barrel with traders sceptical that a deal to cut almost 10 per cent of the world’s supply could prop up a market devastated by the coronavirus pandemic. (FT) 

China recorded trade surplus after easing lockdown China’s exports fell 3.5 per cent year on year in March, marking a modest rebound for the country’s trade sector after steep falls in January and February owing to the global coronavirus pandemic. Venture capital funding also rebounded in March. (FT)

Renault pulls out of China joint venture Renault has decided to stop selling petrol cars in China, pulling out of its lossmaking joint venture with Dongfeng and reversing a strategy put in place with great fanfare by former boss Carlos Ghosn. (FT)

US earnings season begins JPMorgan Chase and Wells Fargo reported steep falls in first-quarter earnings as the two US banks increased loan-loss provisions by $10bn from last year to prepare for the ultimate impact of the coronavirus pandemic. (FT) 

Diamond sector grinds to halt as India’s lockdown bites Ninety per cent of all diamond cutting and polishing is done in India. But when prime minister Narendra Modi ordered a national lockdown, about 200,000 diamond workers fled. (FT)

Former BT chairman joins Huawei UK board Mike Rake, the former BT chairman and president of the CBI employers organisation, has joined Huawei’s UK board as a non-executive director after defending the Chinese company against a political onslaught in recent weeks. (FT) 

Former Goldman banker accused in foreign bribery scheme Asante Berko helped pass millions of dollars in bribes to Ghanaian officials to curry favour for his clients’ plans to build an electrical power plant, the Securities and Exchange Commission alleged on Monday. Mr Berko’s lawyer said he had “no comment for now”. (FT) 

The day ahead

Brexit negotiators try to pick up pieces The EU and UK will return to the Brexit fray on Wednesday to figure out how to salvage negotiations on Britain’s future relationship with the bloc in the face of disruption caused by the coronavirus pandemic. (FT)

Behind the Money podcast

Running a small business during a global pandemic The Behind the Money podcast reports on how one small business owner in rural Virginia is navigating the current economic crisis. 

Reporter’s diary — Brendan Greeley, FT’s US economics editor: “If you look at surveys by the National Federation of Independent Businesses, they’ve said 92 per cent of their members have been affected by this crisis. We don’t know yet how many businesses are going to have to borrow money, but it’s wildly out of scale with anything we’ve seen before.” Listen to the full episode here

What else we’re reading

The world economy is now collapsing A microbe has overthrown our arrogance and sent global output into a tailspin, writes Martin Wolf. One answer is not to abandon the lockdowns before the death rate is brought under control. It will be impossible to reopen economies with a raging epidemic. (FT)

Coronavirus stalled climate change momentum All over the world, emissions are dropping as airlines ground fleets, car traffic declines and industries shut down. With 2.6bn people under lockdown, the virus is having a huge impact on the planet — but the temporary relief could come at a great social and human cost. (FT)

Trump drives heated drug debate From the Oval Office to India’s top medical body, an old malaria drug is getting top billing, with Donald Trump championing hydroxychloroquine as a “game-changer”. But experts see a dangerous gamble. Anthony Fauci, the face of the US coronavirus response, is pushing all the right buttons, Robert Armstrong writes. (FT)

Our pandemic summer There’s no going back to normal now. Instead, we need to use this time to plan for “a turbulent spring, across an unusual summer, and into an unsettled year beyond”, Ed Yong writes in the Atlantic. Here’s how we prepare for what’s ahead. (Atlantic)

The African doctors saving British lives The first two hospital doctors to die of coronavirus in the UK were both of Sudanese origin. Zeinab Badawi, a Sudanese-British journalist, was not surprised. More than 66,000 UK doctors are from outside the EU — mostly from low and middle-income countries, including many of her relatives. (FT)

Science funding must remain after the crisis We must learn our lessons and commit to investing in research and development, writes Audrey Azoulay, director-general of Unesco. Suddenly, governments are pledging money to research teams racing to develop a vaccine. These pledges must not be forgotten. (FT) 

One good thing before you go As the daily deluge of coronavirus news continues to wreak havoc on our anxiety, readers increasingly crave uplifting news. From Instagram accounts and memes to traditional media, the popularity of positivity online is skyrocketing. (New York Times) 

Video of the day

How satellite images show global lockdown Before and after satellite images and drone footage reveal empty city streets around the world, from China to Italy, the UK and the US.

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