It is clear world in recession, says International Monetary Fund chief

Marco Green
March 28, 2020

"We have reassessed the prospect for growth for 2020 and 2021".

"And it is paramount we recognize the importance of supporting emerging market and developing economies to overcome the brunt of the crisis and help restore growth", she said.

Despite calls for recession arriving in the second quarter, Georgieva said the world economy is already mired in deep contraction, and that working across borders is the only way to lift the pandemic's downward pressure.

Georgieva was addressing the press after a meeting of governing body of the IMF, the International Monetary and Financial Committee.

The IMF chief said that though in recession, a recovery is very much possible in 2021 if the virus is contained across the globe.

"We've never seen the world economy standing still". And in a big chunk of developed and emerging markets in developing economies.

Georgieva said the International Monetary Fund also wanted to find ways to provide more debt relief to the poorest countries.

So next steps: the IMFC charged us to discuss these various options further with our Executive Board with a view to having a concrete package of proposals for IMFC consideration at our Spring Meetings in a few weeks' time. However, she warned that it could just be the lower end.

Pakistan has requested an emergency loan disbursement from the International Monetary Fund to help fight the coronavirus under the fund's Rapid Financing Instrument program.

The IMF managing director said that the fund's estimate "for the overall financial needs of emerging markets is $2.5 trillion".

"We do know that their own reserves and domestic resources will not be sufficient", Georgieva said, adding that the fund is aiming to beef up its response "to do more, do it better, do it faster than ever before".

The G-20, a day earlier, reported fiscal measures totalling some 5 trillion dollars or over 6 per cent of the global GDP. These countries find themselves particularly hard hit by a combination of health crisis, sudden stop of the world economy, capital flight to safety, and - for some -sharp drop in commodity prices, she added.

"We are in an unprecedented situation where a global health pandemic has turned into an economic and financial crisis".

The IMF said it has already taken action to provide relief for debt repayments for its poorest members under the Catastrophe Containment and Relief Trust. "We also want to think about what is going to follow the recovery and make sure that we are putting forward measures that can be supportive in this regard", she said.

Other reports by Click Lancashire

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