While the trajectory of coronavirus pandemic remains uncertain, the International Monetary Fund (IMF) expects an economic crisis worse than the great recession of 2008.
The economic outlook for more than 160 countries has turned from positive into negative growth, said Managing Director Kristalina Georgieva on Thursday. "We are still faced with extraordinary uncertainty about the depth and duration of this crisis. It is already clear, however, that global growth will turn sharply negative in 2020, as you will see in our World Economic Outlook next week."
The COVID-19 will be the centre of attention during the 2020 Virtual Spring Meetings next week. Georgieva emphasised the severity of the current crisis which, she said, calls for unprecedented action from the IMF.
"In fact, we anticipate the worst economic fallout since the Great Depression. Just three months ago, we expected positive per capita income growth in over 160 of our member countries in 2020. Today, that number has been turned on its head. We now project that over 170 countries will experience negative per capita income growth this year," said Georgieva.
A partial economic recovery in 2021 will largely depend on whether or not the pandemic is under control so containment measures can be lifted. Something that is hard to predict, she said.
"We estimate the gross external financial needs for emerging markets and developing countries to be in the trillions of dollars, and they can cover only a portion of that on their own, leaving residual gaps in the hundreds of billions of dollars. They urgently need help," said Georgieva.
To build a bridge to recovery, she highlighted four priorities: continue containment measures and support for health systems, shield affected people and firms with large financial measures, reduce stress on the financial system and plan for a recovery phase.
The IMF will do whatever is necessary to support member countries through this crisis, she said.
The encouraging news is that all governments have sprung into action and indeed there has been significant coordination. The Fiscal Monitor next week will show that countries around the world have taken fiscal actions amounting to some eight trillion dollars.
"And in addition, there have been massive monetary measures from the G20 and others. Many of the poorer nations are also taking both fiscal and monetary action, even as they grapple with this fundamental shock to their systems," said Georgieva.