In its mid-year report released on Wednesday, the United Nations estimates the COVID-19 pandemic to shrink the world economy by 3.2 percent this year, the sharpest contraction seen since the Great Depression in the 1930s.
It has forecasted the global economic output to fall by nearly $8.5 trillion over the next two years, wiping out nearly all gains of the last four years.
In January, before COVID-19 became a pandemic, the UN had forecast a modest acceleration in growth of 2.5 percent in 2020.
At a news conference for the launch of the report, UN chief economist Elliott Harris said that the global economic outlook has changed drastically since, with the pandemic's global death toll climbing toward 3 lakh.
With the large-scale restrictions of economic activities and heightened uncertainties, the global economy has come to a virtual standstill in the second quarter of 2020, he said.
We are now facing the grim reality of a severe recession of a magnitude not seen since the Great Depression.
According to the report, nearly 90 percent of the world's economy has been under some form of lock-down, disrupting supply chains, depressing consumer demand and putting millions out of work.
In a worst-case scenario, that is if a second wave of COVID-19 infections flares up and lockdowns continue into the third quarter of the year, the UN estimate the global economy to shrink by 4.9 percent in 2020.
For 2021, UN forecasts more modest 3.4 percent economic growth in 2021 in developed economies and more robust growth of 5.3 percent in developing countries. It said that the global economy could contract by a further 0.5 percent in 2021 if a new wave of infections and lockdowns continues in the third quarter (July-September 2020).