Of the International Monetary Fund (IMF) goes because of the Corona virus-Pandemic from the worst economic crisis since the Great Depression of the 1920s and 1930s. “We expect the worst economic consequences since the Great Depression,” said IMF chief Kristalina Georgieva. Even in the best of cases, there should only be a “partial recovery” in the coming year – but it could also get worse.
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The managing director painted a far darker picture of the social and economic impact of the new corona virus than a few weeks ago. She noted that governments had already implemented $ 8 trillion in fiscal stimulus measures – but more would likely be needed.
Falling per capita income expected in 170 countries
Emerging and developing countries in particular would be hit hard by the crisis, as they would need hundreds of billions of dollars in foreign aid to cope. Many countries in Africa, Asia and Latin America are also at higher risk because they have weaker health systems. They are also unable to maintain a distance between themselves in their densely populated cities and in the slums that are characterized by poverty.
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In addition, according to the IMF, investors have already withdrawn around $ 100 billion in capital from these countries, more than three times as much as in the same period of the global financial crisis. Given the sharp drop in commodity prices, emerging and developing countries would need trillions of dollars to fight the pandemic and save their economies.
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The IMF is ready to use its $ 1 trillion lending capacity, Georgieva said. The fund’s executive board had approved doubling its emergency funding to $ 100 billion to meet requests from over 90 countries – and employees would process the requests as soon as possible.
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“Just three months ago, we expected positive per capita income growth in more than 160 of our member countries in 2020,” said Georgieva ahead of the IMF and World Bank spring meetings next week. “Today this number has been turned upside down: We now expect over 170 countries to experience negative per capita income growth this year.”
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If the pandemic subsides in the second half of the year, there could be a partial recovery in 2021, Georgieva said. But she warned that the situation could also worsen: “I emphasize that there is enormous uncertainty about the prospects: depending on many variable factors, including the duration of the pandemic, they can also worsen.”
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The leading economic institutes in Germany had only drawn up a similar situation picture on Wednesday. Your spring report is following a violent economic slump and rising unemployment figures, however, from a comparatively rapid recovery.
According to the IMF, states have to make more efforts
The IMF, which includes 189 member countries, will publish its detailed forecasts on the global economy on Tuesday. And pretty much all indicators of the economic situation have deteriorated. Georgiewa said, however, that it was encouraging how strongly all governments had reacted to the pandemic threat and given financial and monetary leeway.
In order to enable an upswing in the future, Georgiewa called for further efforts to contain the virus and support the health systems. Export obstacles that could slow down the flow of vital medical equipment and food must be removed. People and companies would have to be provided with “extensive, timely and targeted” measures such as wage subsidies, longer unemployment benefits or cheap loans, also to reduce the burden on the financial system. “The measures we are taking now will determine the speed and strength of our recovery.”
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