The coronavirus epidemic may push the global economy into recession, according to International Monetary Fund (IMF) Managing Director Kristalina Georgieva, who added that the faster the virus stops, the quicker and stronger the recovery will be.
Georgieva made the statement on Tuesday after a G20 emergency conference call with finance ministers and central bank governors on the coronavirus pandemic.
“The outlook for global growth: for 2020 it is negative—a recession at least as bad as during the global financial crisis or worse. But we expect recovery in 2021,” said Georgieva underlining the importance of containing the spread of the covid-19 virus and strengthening health systems.
The IMF chief expressed her concern particularly for low-income countries in debt distress.
At the same time, Georgieva welcomed central banks’ decision to ease monetary policy, which she said “is not only in the interest of each country, but of the global economy as a whole”.
She added that a number of emerging markets and low-income countries face significant challenges in view of the coronavirus pandemic, adding that they are badly affected by outward capital flows, with domestic activity to be severely impacted.
According to Georgieva, investors have already removed 83 billion dollars from emerging markets since the beginning of the Covid-19 health crisis – the largest capital outflow ever recorded.
Lastly, the issue of support for members – almost 80 countries have requested aid – topped the emergency meeting agenda with suggestions including concentrating bilateral and multilateral surveillance on this crisis and policy actions to temper its impact.
She added that the IMF will also step up emergency finance and that it is working closely with other international financial institutions to provide a strong coordinated response, including replenishing the Catastrophe Containment and Relief Trust to help the poorest countries.
Georgieva also said the IMF was ready to deploy 1 trillion dollars in lending capacity.