- Economic Growth Remains Negative for 2020, Expect Recession -IMF
The International Monetary Fund (IMF) on Monday said the world should be prepared for a repeat of 2008 economic recession or worse.
The fund said this year the coronavirus pandemic will cause global economic recession that is “at least as bad as during the global financial crisis or worse.”
In a statement issued by the fund, the Managing Director, IMF, Kristalina Georgieva, said many emerging markets and low-income nations are facing enormous economic challenges.
She said, “The human costs of the coronavirus pandemic are already immeasurable and all countries need to work together to protect people and limit the economic damage. This is a moment for solidarity.
“First, the outlook for global growth: for 2020 it is negative — a recession at least as bad as during the global financial crisis or worse. But we expect recovery in 2021. To get there, it is paramount to prioritise containment and strengthen health systems — everywhere.”
According to the managing director, the impact of the virus on the global economy will be severe but the quicker the world find a solution to it, the better and faster the economic recovery.
“We strongly support the extraordinary fiscal actions many countries have already taken to boost health systems and protect affected workers and firms. We welcome the moves of major central banks to ease monetary policy,” Georgieva said.
She explained that most nations will need fiscal supports and explained that emerging markets and low-income nations will still struggle given the size of capital flight from those economies in recent weeks.
She said, “Second, advanced economies are generally in a better position to respond to the crisis, but many emerging markets and low-income countries face significant challenges. They are badly affected by outward capital flows, and domestic activity will be severely impacted as countries respond to the epidemic.
“Investors have already removed $83bn from emerging markets since the beginning of the crisis, the largest capital outflow ever recorded. We are particularly concerned about low-income countries in debt distress — an issue on which we are working closely with the World Bank.”
She added that the fund is focusing on bilateral and multilateral surveillance on the crisis and policy actions to reduce its impact on member nations.
The IMF boss said, “We will massively step up emergency finance —nearly 80 countries are requesting our help — and we are working closely with the other international financial institutions to provide a strong coordinated response.
“We are replenishing the Catastrophe Containment and Relief Trust to help the poorest countries. We welcome the pledges already made and call on others to join. We stand ready to deploy all our $1tn lending capacity. And we are looking at other available options.”