IMF backs India's proactive COVID-19 response

IMF backs India's proactive COVID-19 response

The International Monetary Fund said that it supports India's proactive decision of a imposing a nationwide lockdown in its fight against coronavirus.

A day earlier, the IMF in its World Economic Outlook had forecast India's growth rate to be 1.9 percent in 2020.

"India entered the pandemic turmoil in the midst of a credit crunch-induced slowdown and its recovery prospect becomes more uncertain," Chang Yong Rhee, the Director of the IMF's Asia and Pacific Department, told reporters during a news conference here.

"Despite the economic slowdown, the government implemented a nationwide lockdown and we support India's proactive decision," Rhee said.

On March 25, India entered a three-week lockdown, which was slated to end on April 14. The lockdown was extended till May 3.

The impact of the coronavirus on the Asia-Pacific region will be severe, across the board, and unprecedented, he said, adding that Asia's growth in 2020 will come to a standstill.

This is worse than the annual average growth rates throughout the Global Financial Crisis (4.7 percent) or the Asian Financial Crisis (1.3 percent). Actually, Asia has not experienced zero growth in the last 60 years, he said. "That said, Asia's growth still fares better than other regions."

For 2021, he said, there is hope. If containment policies succeed there could be a rebound in growth, he said.

However, it is highly uncertain how this year will progress, he added.

China is expected to grow by 1.2 percent in 2020. The revisions to growth reflect both losses of domestic activity due to the social distancing measures, as well as loss of external demand.

"If there is not enough fiscal space, countries will need to re-prioritize from other expenditures," he said.

Noting that containment measures are severely affecting economies, he said targeted support to hardest-hit households and firms is needed.

This is a real economic shock unlike the Global Financial Crisis. Protect people, jobs and industries directly, not just through financial institutions, he said.