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Global growth to 'dip below' 2019 rate: IMF chief

05
Mar '20
Pic: Shutterstock
Pic: Shutterstock
All hopes for a stronger growth this year have been crushed due to the novel coronavirus outbreak, which will hold 2020 global output gains to their slowest pace since the 2008-2009 financial crisis, according to Kristalina Georgieva, managing director of the International Monetary Fund, which expects 2020 world growth to be below 2019’s 2.9 per cent.

“...But how far it will fall and how long the impact will be is still difficult to predict," Georgieva told a news briefing yesterday. She declined to say whether the public health crisis could push the world into a recession.

IMF will issue revised forecasts in the coming weeks, she said. Trade wars pushed global growth last year to the lowest rate since a 0.7 per cent contraction in 2009.

The change in projection would represent a more than 0.4-percentage-point drop from the 3.3 per cent growth IMF had estimated for 2020 in January as US-China trade tensions eased.

The IMF is making available $50 billion in emergency funding to help poor and middle-income countries with weak health systems respond to the epidemic, she said.

About $10 billion of that can be accessed by the poorest countries at zero interest for up to 10 years, while many middle-income countries have access to a pool of about $40 billion at low interest for up to five years.

But larger emerging-market countries such as Brazil, China, and India are ineligible for such assistance, as are countries where the IMF has declared debt to be unsustainable, including Argentina.

Meanwhile, the World Bank said a day before it was providing $12 billion in immediate funds to help developing countries improve their health services, disease surveillance, access to medical supplies and working capital for businesses.

Less than two weeks ago, the IMF told G20 finance leaders in Saudi Arabia that the virus could shave 0.1 percentage point off its January global growth forecast, a milder scenario based on expectations the coronavirus would be largely contained within China.

That view changed over the past week as the virus spread rapidly outside China to more than 70 countries, Georgieva said.

The shift has vastly increased uncertainty and caused demand worldwide to weaken, hitting trade and tourism hard and slashing demand for oil and other commodities as individuals and businesses take precautionary measures to avoid infection.

In China, even as the spread of the virus has slowed, growth will be below the IMF's most recent forecast for 5.6 per cent in 2020, Georgieva was quoted as saying by global newswires.

Still, IMF was encouraged by the restart of some production in China, which is now at about 60 per cent recovered and aiming to reach 90 per cent in coming weeks, she added.

Fibre2Fashion News Desk (DS)


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