The International Monetary Fund says it is envisaging the worst economic fallout globally since the Great Depression, projecting negative growth for 170 countries in the world as the Coronavirus pandemic continue to eat deep into the wealth of nations.
Managing director of the IMF, Kristalina Georgieva, in her Curtain Raiser speech titled “Confronting the Crisis: Priorities for the Global Economy” at the 2020 Virtual Spring Meetings of the IMF/World Bank noted that the fund with a lending capacity of $1 trillion have received the approval of its board to double access to its emergency facilities, which will allow it to meet the expected demand of about $100 billion in financing.
Noting that although the fund had earlier in the year projected positive per capita income growth in over 160 of its member countries in 2020, she said “we are still faced with extraordinary uncertainty about the depth and duration of this crisis.
“It is already clear, however, that global growth will turn sharply negative in 2020. In fact, we anticipate the worst economic fallout since the Great Depression. We now project that over 170 countries will experience negative per capita income growth this year.”
However, she said if the pandemic fades in the second half of the year allowing for a gradual lifting of containment measures and reopening of the economy, “our baseline assumption is for a partial recovery in 2021. But again, I stress there is tremendous uncertainty around the outlook: it could get worse depending on many variable factors, including the duration of the pandemic.”
On emerging markets and low-income nations, she said “just as the health crisis hits vulnerable people hardest, the economic crisis hits vulnerable countries hardest. In the last two months, portfolio outflows from emerging markets were about $100 billion—more than three times larger than for the same period of the global financial crisis.
“The encouraging news is that all governments have sprung into action and, indeed, there has been significant coordination. Our Fiscal Monitor next week will show that countries around the world have taken fiscal actions amounting to about $8 trillion. In addition, there have been massive monetary measures from the G20 and others.”
“We have $1 trillion in lending capacity and are placing it at the service of our membership. We are responding to an unprecedented number of calls for emergency financing—from over 90 countries so far. Our Executive Board has just agreed to double access to our emergency facilities, which will allow us to meet the expected demand of about $100 billion in financing.
“We are reviewing our tool kit…We are working with donors to increase our Catastrophe Containment and Relief Trust to $1.4 billion…And together with the World Bank, we are calling for a standstill of debt service to official bilateral creditors for the world’s poorest countries.”