Just two months ago, on February 19, the Group of 20 finance chiefs of the International Monetary Fund was predicting “global growth appears to be bottoming out.”
Three days later, IMF Managing Director Kristalina Georgieva predicted the virus would likely cut just 0.1 percentage point from the fund’s 3.3% global growth forecast for this year. However, she acknowledged “more dire scenarios” were being studied at the time.
At last count, half of the IMF’s 189 member countries are seeking financial aid. In response, the executive board has agreed to double access to its emergency financing to meet the expected demand of about $100 billion, which was announced by Director Georgieva in a speech Thursday.
In her speech, Georgieva said that the IMF’s baseline outlook …
“…is for a partial recovery in the global economy in 2021 if the pandemic fades in the second half of this year to allow a gradual lifting of containment measures.”
Georgieva stressed that uncertainty about the coronavirus duration means things may wind up getting even worse and could last much longer. Once again, implying more dire scenarios were being studied at the time.
The IMF Managing director said in an interview with Tom Keene on Bloomberg TV the pandemic has spread to almost every corner of the globe has led to business closures and millions of lost jobs. She went on to highlight the job losses and impact to the retail, hospitality, transport and tourism industries and the effect on the self-employed and small- and medium-sized businesses…
“Because it is such a gigantic, dramatic development, a virtual standstill of the world economy, it requires massive, well-targeted measures.”
Georgieva reiterated the IMF’s willingness to use its $1 trillion lending power. Should the crisis continue for longer than expected or if there’s a second wave of the disease, the IMF may need to bolster its resources…
“In that case, creating more reserve assets called special drawing rights, or SDRs, could help emerging markets avoid a cash crunch as they deal with the health crisis, economic stagnation, and capital outflows.”
The IMF and World Bank are now planning to hold their spring meetings via video conference for the first time next week. Their normal in-person meetings, which the organizations convene at their headquarters near the White House, typically draw thousands of delegates, observers, and journalists from 189 member countries.
The IMF managing director revealed her organization calculates that governments around the world have already taken fiscal actions amounting to about $8 trillion. The revelation was a preview of key fund reports due to be released during next week’s meetings. The IMF will also release a new World Economic Outlook.
IMF Needs More Money If Virus Sees New Wave: Georgieva