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IMF chief Kristalina Georgieva said that the global economy is now in a recession due to the impact of COVID-19. “We should not go with small measures now when we know that it is a gigantic crisis,” she said.
International Monetary Fund chief Kristalina Georgieva has stated that the global economy is now in a recession due to COVID-19, Bit she added that she’s “heartened to see world leaders finally realizing that only a coordinated effort will be able to stem the spread of the novel coronavirus”.
“We have stated that the world is now in recession and that the length and depth of this recession depend on two things: Containing the virus and having an effective, coordinated response to the crisis. I’m very encouraged by what I see now. I see much clearer understanding [among global leaders] that if we don’t beat it everywhere we won’t be able to get out of it. We should not go … with small measures now when we know that it is a gigantic crisis. We’ve never seen the world economy standing still. Now we [do]. How we go about revitalizing it is another important topic.”
She noted a “sizeable rebound” is still possible in 2021 if the virus is contained everywhere in the world. Georgieva added liquidity problems will need to be prevented so they do not become a solvency issue.
We already wrote of how the IMF $50 billion aid package is intended to fight the coronavirus. This comes as countries are still spinning from the effects of the outbreak. For most of the developing countries, their responses to the epidemic seem to have been hindered by one thing only: money.
The managing called on governments to implement fiscal policies in order to diminish the risk of a wave of bankruptcies. Georgieva commented that countries already adopted measures in the sum of $5 trillion or 6% of the global gross domestic product.
Georgieva Warns about Recession but Praises $2T U.S. Economic Stimulus
She also went on to praise the decision of the United States government to adopt a $2 trillion COVID-19 economic stimulus package. She noted that it is “absolutely necessary to cushion the world’s largest economy against an abrupt fall in activity.”
Georgieva stressed the $2 trillion bill, which is yet to pass the House of Representatives, is “well-targeted” as it aims to increase the health system’s capacity, help workers against a sudden loss of income and protect firms. The managing director commented the legislation incentivizes keeping workers on the payroll.
China’s Recovery Very Important
Georgieva also went on to mention China and stated that China’s economic recovery after the coronavirus outbreak is very important for the world because of China’s share in the world economy.
Georgieva stressed that China is also playing a “very important role” in the fight against the virus which was first diagnosed in Wuhan since it is now a source of health supplies and health expertise.
She noted China is now stepping up production after it was worst hit in the first quarter of the year when the COVID-19 outbreak was the strongest in the country.
Georgieva also said that the IMF will come up with more lending options to help the “exceptionally high number” of states that will need economic assistance.
The IMF head went on to add the organization will work closely with the International Monetary and Financial Committee and the World Bank. Additionally. “The IMF stands ready to use its U.S. $1 trillion financial capacity to support its member countries,” added she.