International Monetary Fund sees pandemic causing global recession in 2020; recovery in 2021

Marco Green
March 25, 2020

On the other hand, the IMF expects an economic recovery to follow in 2021, she said, adding that the organization welcomes "extraordinary fiscal actions" and monetary easing measures in many countries that their central banks have made a decision to take.

But the International Monetary Fund chief warned that "the economic impact of the epidemic will be severe" too and the recovery could be fast and strong, only if the virus was stopped quickly.

She pointed out that: "We strongly support the extraordinary fiscal actions many countries have already taken to boost health systems and protect affected workers and firms".

Another statement said that G20 finance ministers and central bank governors also conceded that the global economy was heading to a recession and that "coordinated fiscal action" was needed to deal with this crisis.

Saudi Arabia finance minister Mohammed Aljadaan and chair of the meeting in his opening statement stressed the need to step up the G-20 joint efforts and act decisively and in a coordinated manner to provide support to people and businesses, safeguard the stability of the global economy and financial markets, restore confidence and prevent deep and prolonged negative economic impacts.

"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".

"Investors have already removed US$83 billion from emerging markets since the beginning of the crisis, the largest capital outflow ever recorded".

The IMF is particularly concerned about low-income countries in debt distress and was working closely with them to address those concerns, she added.

Asserting that the IMF is concentrating bilateral and multilateral surveillance on this crisis and policy actions to temper its impact, Georgieva said the IMF will massively step up emergency finance - almost 80 countries are requesting our help - and are working closely with the other global financial institutions to provide a strong coordinated response. Several low and middle-income countries have asked for an allocation for the Special Drawing Right, an worldwide reserve asset created by the IMF in 1969 to supplement its member countries' official reserves, as was done during the global financial crisis, she said.

More countries are imposing lockdown measures to contain the rapidly spreading virus, which has infected 337,500 people across the world and killed over 14,600. Bank of America expects the United States economy to shrink by a record 12 percent in the second three months of the year.

"Third, what can we, the International Monetary Fund, do to support our members?"

An economic recovery should follow next year - as long as world leaders work to get the disease under control, she said.

Other reports by Click Lancashire

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