IMF says global economy in recession
Print Edition
The head of the International Monetary Fund has said it is clear that the global economy has now entered a recession that could be as bad or worse than the 2009 downturn.
IMF Managing Director Kristalina Georgieva said the 189-nation lending agency was forecasting a recovery in 2021, saying it could be a “sizable rebound.” But she said this would only occur if nations succeed in containing the coronavirus and limiting the economic damage.
“A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery but erode the fabric of our societies,” she told reporters at a news conference following a telephone conference with finance officials from the 24 nations that make up the IMF’s policy-setting panel.
She said the IMF was updating its economic outlook now and it would be released in a few weeks, allowing the agency more time to assess the economic impacts of the virus.
Asked if the United States was now in recession, she noted that Federal Reserve Chairman Jerome Powell had said on Thursday that America “may well be in a recession.” She said she believed not only the United States but many other advanced economies and a number of developing countries had already entered downturns.
Georgieva said lower income countries were being hit hard, with 81 now seeking support from an IMF emergency financing program.
Kyrgyzstan would receive the first IMF support package of US$120.9 million.
She repeated a pledge that the IMF stood ready to make all US$1 trillion of its lending resources available to countries being hit by the virus.
“We have seen an extraordinary spike in requests for IMF emergency financing,” Georgieva said. “We are being asked by our members to do more, do it better and do it faster than ever before.”
To meet the increased demand she would seek to double the emergency program and simplify the procedures for obtaining IMF support. The IMF was also looking for ways to expand its lending facilities to provide more help to countries.
Georgieva said the IMF also wanted to find ways to provide more debt relief to the poorest countries.
She planned to discuss these issues with the IMF’s executive board with the goal of putting together a package of reforms that could be presented at the IMF’s spring meetings in mid-April. Because of the virus, the meetings of both the IMF and its sister lending organization, the World Bank, will be virtual this year.
“IMF efforts that start to offer debt relief to the poorest countries and that increase financing to help prevent a global financial crisis are really positive and needed steps,” said Eric LeCompte, the executive director of Jubilee USA, a group that campaigns for increased assistance for low income countries.
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