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April IMF projections pointed to a three percent contraction of the global economy, a figure that, if materialized, would mark the worst recession since the Great Depression of the 1930s. Georgieva was even more pessimistic, warning that the latest economic data from many countries anticipates a contraction in the global economy that exceeds that three percent.. Despite forecasting a partial recovery in 2021, the IMF made it clear that results may worsen as the pandemic crisis unfolds.
The United States economy has been particularly affected by the virus, having stagnated due to the closure of states as a containment measure.
United States government data released on Friday revealed that the unemployment rate rose to 14.7 percent in the past month. According to the White House, that number could reach 20 percent in May.
The damaging tension between the United States and China
Kristalina Georgieva took the opportunity to issue a warning to the United States, referring to the tension between Washington and Beijing. For the person in charge, resorting to economic protectionism may weaken prospects for global recovery at this critical time.
Donald Trump, who has come to severely criticize China for the way he has dealt with the pandemic from the start, accusing the country of omitting information about the virus, has threatened to punish him with the imposition of new tariffs.
On Friday, the president even suggested interrupting the first phase of the trade agreement between the two countries, which had established the elimination of some tariffs imposed by the United States in exchange for the acquisition of more American goods by China. The threat comes after the economic crisis in China caused by Covid-19 means that the Asian power is not complying with the agreement.
Although, on Friday, the Chinese and American trade authorities assured that they maintained their intention to continue with the trade agreement until the end, some experts believe Beijing’s promised acquisition of American goods is far behind the pace needed to reach the goal set for the first year of $ 77 billion more than in 2017.
When asked how concerned she is about rising tensions between the two powers and the possibility that they will harm global growth, The IMF chief said it was “immensely important to resist what may be a natural tendency to withdraw behind our borders.”.
Poorer countries at high risk
In this context, Georgieva argued that reviving world trade is essential to respond to the economic crisis, “otherwise costs will go up, income will go down, and we will live in a less secure world.”
The official said that The IMF has already provided emergency funds to 50 of the 103 countries that have requested them.. The poorest countries remain at high risk due to the fall in exports caused by the pandemic, although in these places the number of cases of infection and death by Covid-19 is less than in the richer countries.
Gita Gopinath, chief economist at the IMF, said at an event on Friday that The situation has worsened since March, when the Fund estimated that developing countries and markets would need $ 2.5 billion in external financing to overcome the economic and health crisis..
“This crisis is likely to last much longer,” he lamented. “Therefore, the needs may increase even more than we anticipate now.”
The new coronavirus continues unabated in most countries of the world, has already infected nearly four million people and caused 274,000 deaths.
