The world economy, already ‘sluggish’ before the novel coronavirus outbreak, is bound to suffer a ‘severe recession’ this year, according to International Monetary Fund (IMF) chief Kristalina Georgieva, who recently cautioned that the current crisis posed ‘daunting challenges’ for policymakers in many emerging markets and developing economies.
Addressing the Development Committee Meeting during the annual Spring Meeting of the IMF and the World Bank, Georgieva said a large global contraction in the first half of this year is inevitable.The world economy, already 'sluggish' before the novel coronavirus outbreak, is bound to suffer a 'severe recession' this year, according to International Monetary Fund (IMF) chief Kristalina Georgieva, who recently cautioned that the current crisis posed 'daunting challenges' for policymakers in many emerging markets and developing economies.#
She said the pandemic hit when the world economy was already in a fragile state, weighed down by trade disputes, policy uncertainty and geopolitical tensions.
"The global coronavirus outbreak is a crisis that is like no other and poses daunting challenges for policymakers in many emerging market and developing economies (EMDEs), especially where the pandemic encounters weak public health systems, capacity constraints, and limited policy space to mitigate the outbreak's repercussions," Georgieva said.
"Medium-term projections are clouded by uncertainty regarding the pandemic's magnitude and speed of propagation, as well as the longer-term impact of measures to contain the outbreak, such as travel bans and social distancing," she said.
However, most EMDEs are already suffering from disruptions to global value chains, lower foreign direct investment, capital outflows, tighter financing conditions, lower tourism and remittances receipts, and price pressures for some critical imports such as foods and medicines, she said.
"A large global contraction in the first half of 2020 is inevitable. Prospects thereafter depend on the intensity and efficacy of containment efforts, progress with developing vaccines and therapies, the extent of supply disruptions, shifts in spending patterns, the impact of tighter financial conditions on activity, and the size of the policy response," Georgieva said.
"While the recovery is expected to pick up in 2021, by end-2021 global output would remain significantly below the pre-crisis trend," she added.
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