WASHINGTON -- The global coronavirus pandemic has inflicted an economic crisis unlike any in the past century and will require a massive response to ensure recovery, IMF chief Kristalina Georgieva said Thursday.
The warnings about the damage inflicted by the virus already were stark, but Georgieva said the world should brace for "the worst economic fallout since the Great Depression."
With nearly 89,000 deaths in 192 countries and territories and the number of cases now surpassing 1.5 million worldwide, much of the global economy has been shut down to contain the spread of the virus.
The International Monetary Fund expects "global growth will turn sharply negative in 2020," with 170 of the fund's 180 members experiencing a decline in per capita income, Georgieva said.
Just a few months ago, the fund was expecting 160 countries to see rising per capita income, she said in a speech previewing next week's spring meetings of the IMF and World Bank, which will be held virtually due to the restrictions imposed due to the COVID-19.
'IT COULD GET WORSE'
Even in the best-case scenario, the IMF expects only a "partial recovery" next year, assuming the virus fades later in 2020, allowing normal business to resume as the lockdowns imposed to contain its spread are lifted.
But she added this ominous caution: "It could get worse."
There is "tremendous uncertainty around the outlook" and the duration of the pandemic, Georgieva said.
The IMF will release its latest World Economic Outlook on Tuesday, with grim forecasts for its members this year and next. In January, the IMF projected global growth of 3.3 percent this year and 3.4 percent in 2021.
But that was a different world.
The US economy has purged 17 million jobs since mid-March, with the latest weekly data issued Thursday showing 6.6 million workers filed for unemployment benefits, and economists projecting a double-digit jobless rate this month.
The World Bank said Thursday the pandemic might cause the first recession in Africa in 25 years.
Researchers at the Institute for International Finance (IIF), a global banking association, expect a 2.8 percent plunge in global GDP, compared to a decline of 2.1 percent in 2009 during the global financial crisis.
That is a sharp reversal from October, when the IIF predicted 2.6 percent growth.
Recovery depends on decisive actions now, Georgieva said. The IMF has $1 trillion in lending capacity and is responding to unprecedented calls from 90 countries for emergency financing.
SEND MORE LIFELINES
Countries already have taken steps worth a combined $8 trillion, but Georgieva urged governments to do more.
"Lifelines for households and businesses are imperative" to "avoid a scarring of the economy that would make the recovery so much more difficult."
The IMF board approved a doubling of emergency lending facilities that will provide about $100 billion, and is moving ahead with debt relief for the poorest countries and also help for countries with unsustainable debt levels.
"The bleak outlook applies to advanced and developing economies alike. This crisis knows no boundaries. Everybody hurts," Georgieva said.
She noted that about $100 billion in investments already had fled emerging markets -- more than three times the capital exodus seen in the 2008 global financial crisis.
US officials have scrambled to apply a tourniquet to stem the bleeding of jobs in the world's largest economy and keep the financial system from freezing up.
The Federal Reserve rolled out another series of lending programs Thursday totaling $2.3 trillion to help small and medium businesses as well as state and local governments facing cash shortages.
The US is moving "with alarming speed" from unemployment near a 50-year low, to a "very high" rate, Fed chair Jerome Powell said in a speech Thursday.
And like Georgieva, he indicated the US government will have to provide more direct support, since the Fed is limited to lending to solvent entities.
"All of us are affected, but the burdens are falling most heavily on those least able to carry them," Powell said.
But he also tried to offer some reassurance, saying the US economic rebound could be "robust."
Agence France-Presse
BENGALURU -- The global economy is already in a recession as the hit to economic activity from the coronavirus pandemic has become more widespread, according to economists polled by Reuters amid a raft of central bank stimulus actions this week.
The spread of the disease caused by the virus, COVID-19, has sent financial markets into a tailspin despite some of the biggest emergency stimulus measures since the global financial crisis announced by dozens of central banks across Europe, the Americas, Asia and Australia.
The panic was clear in stocks, bonds, gold and commodity prices, underlining expectations of severe economic damage from the outbreak.
More than three-quarters of economists based in the Americas and Europe polled this week, 31 of 41, said the current global economic expansion had already ended, in response to a question about whether the global economy was already in recession.
"Last week we concluded that the COVID-19 shock would produce a global recession as nearly all of the world contracts over the three months between February and April," noted Bruce Kasman, head of global economic research at JP Morgan.
"There is no longer doubt that the longest global expansion on record will end this quarter. The key outlook issue now is gauging the depth and the duration of the 2020 recession."
Economists have repeatedly cut their growth outlook over the past month and have increased their forecast probabilities for recession in most major economies.
The worst-case views on growth taken just weeks ago in some cases have already into the central scenario for private sector economists in Reuters polls.
"The evolving news on COVID-19 has triggered 'forecast leap frogging,' with economists and strategists repeatedly lowering their forecasts. Among the big 3 economies, the US and the euro area will see negative growth, while Chinese growth is expected to come in at a paltry 1.5 percent," said Ethan Harris, head of global economics at BofA.
"Our first piece on the virus shock was titled 'bad or worse'; now we amend that to 'really bad or much worse.' We now expect COVID-19 to cause a global recession in 2020, of similar magnitude to the recessions of 1982 and 2009."
The global economy was forecast to expand 1.6 percent this year, about half the 3.1 percent predicted in the January poll, and the weakest since the global financial crisis of 2007-09. Forecasts for 2020 global GDP ranged from -2.0 percent to +2.7 percent.
"As cases of coronavirus spiral upward, disruptions to the global economy are increasing. We have cut our global GDP growth forecast to 1.25 percent for the year - less severe than the deep recessions of 1981-82 and 2008-09, but worse than the mild recessions of 1991 and 2001," noted Goldman Sachs' economics research team.
"Consistent with this, our economists now expect recessions in Europe, Japan, Canada and possibly the United States."
The US economy was almost certain to enter a recession this year, if it is not in one already, according to a poll published on Thursday and taken after the Federal Reserve's emergency move on Sunday.
"The US economy is going to have a shock from this coronavirus and I think that there's still a lot of uncertainty around the size and the depth and the prolonged period of the shock," said Tiffany Wilding, North American economist at Pacific Investment Management Co (PIMCO).
"We're still getting our heads wrapped around that. We think it's quite likely that the US has a small technical recession this year."
As for the world's second largest economy, China, where the virus outbreak originated, a Reuters poll published on March 6 showed the outlook was once again cut significantly for this quarter, next quarter, and for 2020.
Since then, economists have been slashing their forecasts even more.
The economic damage from the outbreak was predicted to reverberate through other major economies in Asia too, with most forecast to slow significantly, halt or shrink outright in the current quarter according to a Feb. 26 Reuters poll.
Japan's economy, which already contracted sharply toward the end of 2019, was expected to grow only 0.1 percent in the new fiscal year that begins in April, a March 6 Reuters survey found, revised down from 0.5 percent projected in February.
Following the rapid spread of virus infections from China to other countries, including Europe, the risk of a euro zone recession doubled in a poll taken earlier this month.
It was not very different for the UK, where the Bank of England cut rates to near-zero on Thursday and re-started its asset purchases.
The British economy was expected to expand 0.1 percent this quarter and then contract 0.3 percent next quarter, a sharp revision from the 0.3 percent expansion they had expected before for both the quarters in the previous poll.
In a worst case scenario, the economy was forecast to contract 1 percent next quarter and by 0.7 percent in 2020. Forecasts were as low as -5 percent and -3 percent, respectively, with no economist expecting growth in either period in the worst case.
source: news.abs-cbn.com
