Large global contraction in the first half of 2020 inevitable: IMF

Large global contraction in the first half of 2020 inevitable: IMF

A large global contraction in the first half of this year is inevitable, the International Monetary Fund has warned, asserting that the coronavirus pandemic has struck the world economy that was already in a fragile state as it was weighed down by trade disputes, policy uncertainty and geopolitical tensions.

IMF Managing Director Kristalina Georgieva said on Friday that the world economy was in a sluggish recovery before the coronavirus outbreak, warning that it is now bound to suffer a "severe recession" in 2020.

Addressing the Development Committee Meeting during the annual Spring Meeting of the International Monetary Fund (IMF) and the World Bank, a severe economic impact in the first half of 2020 was inevitable and the pandemic encounters weak public health systems.

"The global coronavirus outbreak is a crisis that is like no other and poses daunting challenges for policymakers in many emerging market and developing economies (EMDEs), especially where the pandemic encounters weak public health systems, capacity constraints, and limited policy space to mitigate the outbreak's repercussions," Georgieva said.

She said the medium termed projections were clouded by uncertainities.

"Medium-term projections are clouded by uncertainty regarding the pandemic's magnitude and speed of propagation, as well as the longer-term impact of measures to contain the outbreak, such as travel bans and social distancing," she said.

However, most EMDEs are already suffering from disruptions to global value chains, lower foreign direct investment, capital outflows, tighter financing conditions, lower tourism and remittances receipts, and price pressures for some critical imports such as foods and medicines, she said.

"The world economy was in a sluggish recovery before the coronavirus outbreak… and is now bound to suffer a severe recession in 2020," Georgieva added.

According to Johns Hopkins University data, the number of confirmed coronavirus cases surpassed two million globally and 144,000 people have died so far. The US is the worst hit with more than 700,000 COVID-19 cases and 35,000 deaths.

Rising malnutrition is expected as 368.5 million children across 143 countries who normally rely on school meals for a reliable source of daily nutrition must now look to other sources, the IMF official said.

Georgieva said that prospects had deteriorated sharply with the spread of the COVID-19 pandemic.