IMF head sees worst economic downturn since Great Depression

The coronavirus (COVID-19) pandemic will push the global economy into the deepest recession for the reason that Great Depression, with the world's poorest countries suffering the most, the top of the International Monetary Fund (IMF) said Thursday.

“We assume the worst monetary fallout since the Great Depression,” IMF Managing Director Kristalina Georgieva said Thursday in comments previewing next week’s digital meetings of the 189-country IMF and its sister lending organisation, the World Bank.

She stated that the IMF would release an updated world monetary forecast on Tuesday that will display just how quickly the coronavirus outbreak has become what had been expected to be a healthy yr of a boom right into a deep downturn.

Just three months ago, the IMF became forecasting that one hundred sixty nations would enjoy a positive income boom on an according to capita basis. Now the expectation is that over 170 international locations may have negative in step with capita income growth this year.

Emerging markets and low-income international locations throughout Africa, Latin America and much of Asia are at high risk, she said.

“With weak health systems, to begin with, many face the dreadful mission of fighting the virus in densely populated towns and poverty-troubled slums, where social distancing is rarely an option,” Georgieva stated.

Investors have grown terrified of leaving their money in emerging economies that could be hit onerous through an international recession. As a result, capital outflows from rising-market international locations have totalled greater than $100 billion over the past months, more significant than three instances larger than the identical duration at the begin of the global economic crisis, Georgieva noted.

Also, countries that rely upon exporting commodities have taken a double blow due to the steep fall in commodity prices.

Georgieva said there became absolute confidence that 2020 could be a “particularly difficult” year. She stated if the pandemic fades in the second 1/2 of the year, permitting the slow lifting of containment measures and the reopening of the global economic system, the IMF is forecasting a partial restoration in 2021.

“I strain there is top-notch uncertainty across the outlook,” she stated. “It could get worse depending on many variable factors, along with the period of the pandemic.”

She said that she and World Bank President David Malpass would pursue at next week’s digital conferences a settlement to undertake a standstill on debt payments over the next 12 months by way of the world’s poorest countries, releasing up the cash they could use for essential fitness needs.

She also said that the IMF is ready to devote its $1 trillion in lending capability to offering help to countries that need assistance coping with the pandemic.

“We are responding to an unprecedented range of calls for emergency financing from over ninety international locations so far,” she stated.

The IMF’s executive board has agreed to double the loan stages it will provide from its emergency centres that she stated must allow the IMF to offer around $a hundred billion in financing to low-earnings nations.