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A global pandemic will cause a sharp decline in the world economy in 2020. The expected recession will be the worst of the Great Depression in the 1930s, with only a partial recovery in 2021. This is stated by the Managing Director of the International Monetary Fund (IMF ) Kristalina Georgieva
Kristalina Ivanova Georgieva was born on August 13, 1953 in Sofia.
Your secondary educationquoted by Reuters.
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The IMF chief draws a much darker picture of the social and economic consequences of the spread of the new coronavirus than a few weeks ago. She notes that governments have already implemented fiscal stimulus measures worth 8 trillion. dollars, and that’s encouraging, but it will probably take more money.
The crisis is likely to affect emerging markets and developing countries more, which will then need hundreds of billions of dollars in foreign aid.
Just three months ago, we expected positive economic growth per capita in 160 of our member states in 2020, he said in a statement prepared ahead of the IMF and World Bank spring meetings.
Today, the numbers are reversed. We now forecast that more than 170 countries will have negative growth per capita this year, Georgiev added.
If the pandemic weakens in the second half, the IMF expects a partial recovery in 2021. However, the situation could be worse, warns the head of the IMF.
I insist that there is great uncertainty about the prospects. It can worsen depending on a number of variables, including the duration of the pandemic, he said.
The IMF, of which 189 countries are members, will publish detailed economic forecasts on Tuesday, April 14.
The pandemic affects both rich and poor countries. However, those in Africa, Asia, and Latin America are at higher risk as they have weaker health systems. Nor can they introduce measures of social distance in overcrowded cities and poor suburbs, says Georgieva.
According to her, investors have already withdrawn around $ 100 billion from these economies, which is almost three times the capital outflow for the same period of the previous financial crisis.
Given low commodity prices, emerging markets and developing countries will need trillions of dollars to fight the epidemic and save their economies, he said.
The IMF estimates that hundreds of billions of dollars will have to be moved from external sources, as these governments can only cover a small fraction of the cost alone.
To ensure a future recovery, Georgieva calls for continued efforts to curb the spread of the virus in support of health systems, while avoiding export controls that could delay the provision of vital medical equipment and food.
It is imperative that large-scale, timely and targeted measures are provided for the individuals and businesses involved, such as wage subsidies, expanded unemployment assistance plans, and tight credit conditions, while reducing tensions in the financial system. Coordinated fiscal incentives are paramount and monetary policy must continue to adjust when inflation is low.
The IMF is set up for those times and is ready to use its $ 1 trillion line of credit. dollars, Georgieva emphasizes.
The Fund’s Executive Board has already approved doubling the emergency funds to $ 100 billion to respond to requests from more than 90 countries. The IMF is also looking for ways to provide additional liquidity support, including through the creation of a short-term liquidity line and solutions that allow loans to be made even to countries with volatile sovereign debt, the head of the organization said.
In order to help the poorest, countries and the World Bank, among other measures, are asking lenders like China and other countries to temporarily give up on collecting their bilateral loans, notes the BTA.
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