It also said that a major new outbreak in 2021 could shrink the year's growth to a barely perceptible 0.5 percent and urged action to build resilience against a subsequent virus surge.
"It was already the worst recession since the Great Depression in April when we had projected growth for 2020 to be at minus 3 percent", International Monetary Fund chief economist Gita Gopinath told reporters during a webcast on Wednesday.
Latin American economies, where infections are still rising, saw some of the largest downgrades, with the Brazil economy now expected to shrink 9.1 per cent, Mexico's 10.5 per cent and Argentina's 9.9 per cent in 2020.
This would spell an abrupt turn from the 6 percent growth tallied in 2019, and the 6.3 percent estimate issued by the multilateral lender prior to the global health crisis.
Economists are trying to get to grips with the unprecedented fallout triggered by coronavirus containment measures as borders closed, businesses shut and entire sectors of the global economy ground to a halt.
The IMF warned that their latest edition of the World Economic Outlook is based on key assumptions including lengthier lockdowns in economies struggling to control COVID-19 infection rates.
The IMF official explained that excluding a few large frontier economies, the remaining group of low-income developing countries is projected to contract by -2.2 per cent in 2020. China will still manage to expand 1 per cent, supported by policy stimulus.
The IMF said it now sees more pain around the world, with global output tumbling by 4.9 per cent instead of the 3 per cent expected in April.
Global trade volume in goods and services will probably tumble 11.9 per cent this year, the fund said.
"The extent of the recent rebound in financial market sentiment appears disconnected from shifts in underlying economic prospects-as the June 2020 Global Financial Stability Report (GFSR) Update discusses-raising the possibility that financial conditions may tighten more than assumed in the baseline".
"A second wave would generate basically zero growth in 2021".
The scenario assumes emerging markets experience greater damage than advanced economies, given more limited space to support incomes.
France is now expected to see a decline of 12.5 percent, down 5.3 percentage points from its April figure, and Italy, minus 12.8 percent, down 3.7 percentage points.