WASHINGTON • The coronavirus pandemic will cause a global recession this year that could be worse than the one triggered by the global financial crisis of 2008 to 2009, but world economic output should recover next year, the International Monetary Fund (IMF) has said.
IMF managing director Kristalina Georgieva welcomed extraordinary fiscal actions already taken by many countries to boost health systems and protect affected companies and workers, and steps taken by central banks to ease monetary policy.
"Even more will be needed, especially on the fiscal front," she said on Monday.
Ms Georgieva issued the new outlook after a conference call with finance ministers and central bankers from the Group of 20 economies - the world's largest - which she said agreed on the need for solidarity across the globe.
"The human costs of the coronavirus pandemic are already immeasurable and all countries need to work together to protect people and limit the economic damage," she said.
More countries are imposing lockdown measures to contain the virus, which has infected more than 380,000 people across the world and killed over 16,500.
Ms Georgieva said the outlook for global growth was negative and the IMF now expected "a recession at least as bad as during the global financial crisis or worse".
Earlier this month, she had warned that this year's world growth would be below the 2.9 per cent rate seen last year, but stopped short of predicting a recession.
Trade wars pushed global growth last year to the lowest rate since a 0.7 per cent contraction in 2009.
On Monday, Ms Georgieva said a recovery was expected next year, but to reach it, countries would need to prioritise containment and strengthen health systems. "The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be."
She said the IMF would step up emergency finance massively, noting that 80 countries had already requested help and that the IMF stood ready to deploy all of its US$1 trillion (S$1.45 trillion) in lending capacity.
Advanced economies were generally in better shape to deal with the crisis, but many emerging markets and low-income countries face significant challenges, including outward capital flows.
Investors have already removed US$83 billion from emerging markets since the start of the crisis, the largest capital outflow ever recorded, Ms Georgieva said.
The IMF is particularly concerned about low-income countries in debt distress and was working closely with them to address those concerns, she added.
The IMF called on members to contribute funds to replenish its Catastrophe Containment and Relief Trust to help the poorest countries.
Several low-and middle-income countries have asked for an allocation for the Special Drawing Right, an international reserve asset created by the IMF in 1969 to supplement its member countries' official reserves, as was done during the global financial crisis, she said.
IMF members also needed to provide additional swap lines with emerging-market countries to address a global liquidity crunch, she said. The IMF was also exploring a proposal that would help facilitate a broader network of swap lines, including through an IMF-swap-type facility.
REUTERS
