IMF Managing Director Kristalina Georgieva said the global recession caused by the Covid-19 pandemic could be worse than the one that followed the 2008 financial crisis.
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The global recession following the coronavirus pandemic could be worse than the one that followed the 2008 financial crisis, IMF Managing Director Kristalina Georgieva warned Monday 23 March during a videoconference with members of the G20.
“Otherwise worse”
In a statement, she said she warned finance ministers and central bankers that the outlook for global growth was “negative” for 2020 and said that we should expect “a recession at least as severe as during the financial crisis if not worse “.
In 2009, global GDP fell 0.6%, according to IMF data. For advanced economies alone, it fell by 3.16% and by 4.08% for the countries of the euro zone.
Reprise
“But we expect a recovery in 2021,” she added more optimistically. However, “to get there, it is essential to prioritize containment and strengthen health systems”, everywhere.
“The economic impact is and will be serious, but the faster the virus is stopped, the faster and stronger the recovery,” she also said.
The coronavirus pandemic has forced many countries to take drastic measures – the suspension of airlines, the closure of shops, bars and restaurants and the confinement of millions of people, putting a stop to world economic activity.
The International Monetary Fund also noted that it “strongly supports the extraordinary fiscal measures that many countries have already taken to strengthen health systems and protect the workers and businesses involved”.
“Better placed” countries
The head of the Washington institution, however, urged more efforts, noting that advanced economies were “generally better placed to respond to the crisis” while many emerging markets and low-income countries are “facing challenges important ”.
It says investors have already withdrawn $ 83 billion from emerging markets since the start of the crisis, “the largest capital outflow ever.”
“We are particularly concerned about low-income over-indebted countries – an issue we are working on closely with the World Bank,” she also said.
For its part, the IMF “massively intensifies emergency financing” while nearly 80 countries out of 189 member countries have requested its financial assistance.
The Fund says it is “ready to deploy its entire financing capacity, ie $ 1,000 billion”.
Ms. Georgieva also ensures working in collaboration with other international financial institutions “to provide a solid coordinated response”.
World Bank Aid Package
In a separate statement, the World Bank said it approved an immediate $ 14 billion aid package to fight the impact of the coronavirus.
“We are also preparing projects in 49 countries […] with decisions expected this week on no less than 16 programs », said David Malpass, its president, quoted in the text.
David Malpass said the World Bank group, which includes the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA), was able to deploy up to $ 150 billion over the next 15 month.
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