The International Monetary Fund (IMF) managing director, Kristalina Georgieva has said that global economic outlook has darkened further and it would suffer the worst blow since the 1930s as a result of the coronavirus crisis.
Georgieva in an interview with the Financial Times, said the IMF will next month publish downward revisions to its global economic forecasts, reflecting the fact that the virus had spread further and the economic impact had intensified in recent weeks.
In mid-April the IMF forecast a contraction of 3 percent in global output, with emerging and developing economies contracting 1 percent and advanced economies 6.1 percent over the course of this year.
“With the crisis still spreading, the outlook is worse than our already pessimistic projection. Without medical solutions on a global scale, for many economies a more adverse development is likely,” Georgieva said in the interview.
Georgieva said the IMF’s previous forecast that emerging and developing countries would need $2.5 trillion of financial assistance to see them through the crisis would also be revised upwards.
“It is very important to concentrate on understanding clearly what protection measures we can offer to [emerging and developing] countries so that a liquidity problem does not become a solvency problem,” she said.
Countries had announced fiscal support measures adding up to $8.7 trillion since the onset of the crisis, Ms Georgieva said, adding that the IMF’s message to its members was, “please, spend as much as you can and then a little bit more”.
But, she added, the record capital outflows that emerging economies experienced in March had “seen a reversal” in April.
This was thanks in part to liquidity injections by central banks including the US Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan, which had fuelled investors’ bond-buying.
* Financial Times