WASHINGTON: The world economy, already "slow" before the coronavirus outbreak, will now experience a "severe recession" in 2020, said IMF Director Kristalina Georgieva, saying the current crisis posed "enormous challenges" for policy makers. formulate policies in many emerging markets. and developing economies.
Addressing the Development Committee Meeting during the Annual Spring Meeting of the International Monetary Fund (IMF) and the World Bank, the Managing Director of the IMF said that a major global contraction in the first half of this year was inevitable.
He said the coronavirus pandemic hit the world economy when it was already in a fragile state, as it was affected by trade disputes, political uncertainty and geopolitical tensions.
"The global coronavirus outbreak is a crisis unlike any other and poses daunting challenges for policy makers in many emerging markets and developing economies (EMDEs), especially where the pandemic encounters weak public health systems , capacity constraints and limited policy space to mitigate the impact of the outbreak, "said Georgieva.
She said the world economy was in a "slow" recovery before the coronavirus outbreak, warning that it will now surely experience a "severe recession" in 2020.
She said the medium-term projections were clouded by uncertainty.
"The medium-term projections are clouded by uncertainty about the magnitude and speed of the pandemic's spread, as well as the long-term impact of measures to contain the outbreak, such as travel bans and social distancing," he said. .
However, most EMDEs are already experiencing disruptions in global value chains, less foreign direct investment, capital outflows, tighter financial conditions, lower tourism and remittance revenues, and price pressures for some critical imports, such as food and medicine, he said.
"The world economy was in a slow recovery before the coronavirus outbreak … and now it will surely experience a severe recession in 2020," added Georgieva.
According to data from Johns Hopkins University, the number of confirmed coronavirus cases exceeded two million worldwide and 144,000 people have died so far. The United States is the most affected with more than 700,000 cases of COVID-19 and 35,000 deaths.
An increase in malnutrition is expected as 368.5 million children in 143 countries that normally depend on school meals for a reliable source of daily nutrition must now seek other sources, the IMF official said.
Georgieva said that prospects had sharply deteriorated with the spread of the COVID-19 pandemic.
Countries that were affected early, such as China, South Korea and Italy, have suffered major contractions in manufacturing activity and services, exceeding the losses recorded at the start of the global financial crisis, Georgieva said.
She said activity declines have been accompanied by a sharp revaluation of financial assets amid rapidly deteriorating risk sentiment, large capital liquidations, widening risk margins and reversals of portfolio flows to EMDE.
Many commodity prices have fallen sharply, especially for oil.
"A large global contraction in the first half of 2020 is inevitable. Prospects thereafter depend on the intensity and effectiveness of containment efforts, progress with the development of vaccines and therapies, the extent of supply disruptions , changes in spending patterns, the impact of tighter financial conditions on activity and the size of the policy response, "said Georgieva.
The global economy is supposed to start recovering in the third quarter, as public health measures slow down and the impact of policy support materializes.
"While the recovery is expected to rebound in 2021, by the end of 2021 world output would remain significantly below the pre-crisis trend," he said. The IMF Managing Director said the immediate priority is to minimize the human cost and economic disruption of the pandemic.
"Bold action by the international community is needed to help LIDCs cope with the pandemic and its economic and social repercussions," he said.
"The first priority should be to limit the human cost of the pandemic. Policymakers should use all the tools at their disposal to slow the spread of the pandemic and avoid overloading their health systems; the idea of compensation between saving lives and saving livelihoods is a false dilemma, "she added.
Addressing the Development Committee Meeting during the Annual Spring Meeting of the International Monetary Fund (IMF) and the World Bank, the Managing Director of the IMF said that a major global contraction in the first half of this year was inevitable.
He said the coronavirus pandemic hit the world economy when it was already in a fragile state, as it was affected by trade disputes, political uncertainty and geopolitical tensions.
"The global coronavirus outbreak is a crisis unlike any other and poses daunting challenges for policy makers in many emerging markets and developing economies (EMDEs), especially where the pandemic encounters weak public health systems , capacity constraints and limited policy space to mitigate the impact of the outbreak, "said Georgieva.
She said the world economy was in a "slow" recovery before the coronavirus outbreak, warning that it will now surely experience a "severe recession" in 2020.
She said the medium-term projections were clouded by uncertainty.
"The medium-term projections are clouded by uncertainty about the magnitude and speed of the pandemic's spread, as well as the long-term impact of measures to contain the outbreak, such as travel bans and social distancing," he said. .
However, most EMDEs are already experiencing disruptions in global value chains, less foreign direct investment, capital outflows, tighter financial conditions, lower tourism and remittance revenues, and price pressures for some critical imports, such as food and medicine, he said.
"The world economy was in a slow recovery before the coronavirus outbreak … and now it will surely experience a severe recession in 2020," added Georgieva.
According to data from Johns Hopkins University, the number of confirmed coronavirus cases exceeded two million worldwide and 144,000 people have died so far. The United States is the most affected with more than 700,000 cases of COVID-19 and 35,000 deaths.
An increase in malnutrition is expected as 368.5 million children in 143 countries that normally depend on school meals for a reliable source of daily nutrition must now seek other sources, the IMF official said.
Georgieva said that prospects had sharply deteriorated with the spread of the COVID-19 pandemic.
Countries that were affected early, such as China, South Korea and Italy, have suffered major contractions in manufacturing activity and services, exceeding the losses recorded at the start of the global financial crisis, Georgieva said.
She said activity declines have been accompanied by a sharp revaluation of financial assets amid rapidly deteriorating risk sentiment, large capital liquidations, widening risk margins and reversals of portfolio flows to EMDE.
Many commodity prices have fallen sharply, especially for oil.
"A large global contraction in the first half of 2020 is inevitable. Prospects thereafter depend on the intensity and effectiveness of containment efforts, progress with the development of vaccines and therapies, the extent of supply disruptions , changes in spending patterns, the impact of tighter financial conditions on activity and the size of the policy response, "said Georgieva.
The global economy is supposed to start recovering in the third quarter, as public health measures slow down and the impact of policy support materializes.
"While the recovery is expected to rebound in 2021, by the end of 2021 world output would remain significantly below the pre-crisis trend," he said. The IMF Managing Director said the immediate priority is to minimize the human cost and economic disruption of the pandemic.
"Bold action by the international community is needed to help LIDCs cope with the pandemic and its economic and social repercussions," he said.
"The first priority should be to limit the human cost of the pandemic. Policymakers should use all the tools at their disposal to slow the spread of the pandemic and avoid overloading their health systems; the idea of compensation between saving lives and saving livelihoods is a false dilemma, "she added.
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