IMF SEES LIMITED GLOBAL ECONOMIC IMPACT OF CORONAVIRUS

Coronavirus has affected people across the world and the virus has spread quickly.

The impact of coronavirus, COVID-19, on global economy would be relatively minor and short-lived as the Chinese economy would return to normal in the second quarter of 2020, said the managing director of International Monetary Fund in Saudi Arabia's capital  city Riyadh.

IMF's Kristalina Georgieva made a statement at the G20 Finance Ministers and Central Bank Governors meeting.

“While the impact of the epidemic continues to unfold, the World Health Organization’s assessment is that with strong and coordinated measures, the spread of the coronavirus in China and globally can yet be contained and the human tragedy arrested. We are still learning about how this complex virus spreads and the uncertainties are too great to permit reliable forecasting. Many scenarios can play out, depending on how quickly the virus is contained and how fast the Chinese and other affected economies return to normal," she said.

Kristalina Georgieva
The IMF director added: “In our current baseline scenario, 2020 growth for China would be 5.6 percent. This is 0.4 percentage points lower than the January 2020 World Economic Outlook Update. Global growth would be about 0.1 percentage points lower."

In January, the IMF projected global growth to strengthen from 2.9% last year to 3.3% this year.
Besides the risks of COVID-19, the IMF pointed to other risks: High debt levels in countries and corporates could be affected by a rise in risk premiums or an unanticipated tightening in financial conditions; and climate change has been associated with an increase in the frequency of natural disasters.

“We have an important agenda ahead. With slow growth and low inflation, monetary policy should remain accommodative in most G20 economies. Fiscal policy should also be deployed, where space allows, to support economic prospects; this does not have to be costly and could be done through reprioritizing spending toward high-return infrastructure and investment in people. At the same time, structural reforms should be implemented to boost productivity, growth, and jobs," said Ms. Georgieva.

Concluding and summing the meeting, the IMF highlighted three areas where international cooperation is key:

  1. First, we must work together to contain COVID-19—both its human and economic impact—especially if the outbreak turns out to be more persistent and widespread. The IMF stands ready to help, including through our Catastrophe and Containment Relief Trust that can provide grants for debt relief to the poorest, most vulnerable countries.
  2. Second, cooperation is required to further reduce uncertainty over global trade. Despite the Phase 1 deal, trade tensions have shaved 0.6 percent off this year’s global GDP. It remains essential to move from trade truce to trade peace.
  3. Third, the world must collaborate to scale up climate change mitigation and adaptation.

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