IMF Managing Director Kristalina Georgieva, while addressing the Development Committee Meeting during the annual Spring Meeting of the International Monetary Fund (IMF) and the World Bank, said a large global contraction in the first half of this year was ineluctable.
The chief of IMF, Georgieva, said that the world economy was already “sluggish” before the pandemic and is now bound to suffer a “severe recession” in 2020. The coronavirus crisis hit the world economy when it was already in a fragile state as it was weighed down by trade disputes, policy uncertainty, and geopolitical tensions.
IMF, She added that the current crisis posed “daunting challenges” for policymakers in many emerging markets and developing economies, especially territories with weak public health systems, capacity constraints, and limited policy space to mitigate the outbreak’s repercussions. States that were affected early — such as China, Italy & South Korea — have been subjected to large contractions in manufacturing activity and services, exceeding the losses recorded at the inception of the global financial crisis, Georgieva said.
IMF, She noted that medium termed projections are clouded by uncertainty regarding the pandemic’s magnitude and speed of propagation. However, most developing economies are already suffering from lower foreign direct investment, capital outflows, tighter financing conditions, lower tourism, disruptions to global value chains, and remittances receipts, and price pressures for essential imports such as foods and medicines. The prices of many commodities have fallen sharply, notably for oil which fell minus $37.63 a barrel on Monday.
The IMF official also said that widening malnutrition is expected as 368.5 million children across 143 countries, who, ordinarily rely on school meals for an infallible source of daily nutrition must now look to other sources a school is shut in the wake of the pandemic.
IMF, As public health measures are reduced and the impact of policy support manifests, it is assumed that the global economy would start recuperating from the third quarter — “While the recovery is expected to pick up in 2021, by end-2021 global output would remain significantly below the pre-crisis trend,” Georgieva said.
IMF, She further reiterated that the first priority must be to limit the fatalities from the pandemic. Policymakers must employ all instruments at their disposal to impede the pandemic’s spread and prevent overwhelming their health systems. The idea of a trade-off between saving lives and saving livelihoods is a false dilemma.