The International Monetary Fund (IMF), on Monday, said that the global economy is likely to contract this year, citing the devastating impact of the coronavirus pandemic.
IMF Managing Director, Dr. Kristalina Georgieva, made the prediction in a statement issued after a call with G20 Finance Ministers and central bankers.
Georgieva said the economic outlook for the world economy for 2020 “is negative – a recession at least as bad as during the global financial crisis or worse. But we expect recovery in 2021.”
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.”
The IMF boss said the Fund is ready to deploy all its “$1 trillion lending capacity.”
According to her, “The economic impact is and will be severe, but the faster the (corona) virus stops, the quicker and stronger the recovery will be.”
She said the IMF strongly supports the extraordinary fiscal actions many countries have already taken to boost health systems and protect affected workers and firms, adding that the Fund also backs the moves of major central banks to ease monetary policy.
“These bold efforts are not only in the interest of each country, but of the global economy as a whole. Even more will be needed, especially on the fiscal front,” she said.
Georgieva said while advanced economies are generally in a better position to respond to the crisis, 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 $83 billion ($143 billion) 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 stated.
Disclosing that almost 80 countries have asked the Fund for help, she said the IMF will massively step up emergency finance and was working closely with the other international financial institutions to provide a strong coordinated response to the crisis.
“We are concentrating bilateral and multilateral surveillance on this crisis and policy actions to temper its impact,” she said.
Georgieva told the G20 Finance Ministers and central bankers that: “These are extraordinary circumstances. Many countries are already taking unprecedented measures. We at the IMF, working with all our member countries, will do the same. Let us stand together through this emergency to support all people across the world.”