IMF "This Year Could See a Recession Worse Than the Global Financial Crisis"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), forecasted that a global recession is expected this year due to the impact of the novel coronavirus disease (COVID-19), and it could be more severe than the 2008-2009 global financial crisis.

In a statement released after a phone conference with finance ministers and central bank governors of the Group of Twenty (G20) on the day, Managing Director Georgieva said, "The cost of the COVID-19 pandemic has already reached an incalculable level, and all countries must work together to reduce economic damage and protect people."

Georgieva predicted that the global economy this year will be as bad as or worse than during the global financial crisis but is expected to recover next year. She emphasized that strengthening health systems and quarantine efforts must be the top priority, stating, "Although the economic damage is expected to be severe, recovery will be faster and stronger once the spread of COVID-19 stops."

She particularly stressed the need for more efforts in the fiscal sector and strongly supported many countries' accommodative monetary policies and emergency fiscal measures. She added, "These bold efforts are not only for each country but also for the global economy and the whole world."

Furthermore, Georgieva noted regarding the COVID-19 response that "generally, advanced countries are in a better position to respond," and "the crisis will hit many emerging markets harder." She requested G20 finance ministers for advanced countries to provide more support to low-income countries, saying, "The IMF is ready to deploy its full $1 trillion lending capacity."

On the same day, David Malpass, President of the World Bank (WB) Group, also announced that resources amounting to $150 billion could be mobilized over the next 15 months to support developing countries in response to COVID-19. In a statement, Malpass made this announcement and also urged G20 creditor countries to suspend debt repayments from the poorest countries while they fight COVID-19.

Malpass said that the COVID-19 pandemic is expected to cause a major recession in the global economy beyond its health impacts. He urged countries to act swiftly to expand health spending, strengthen social safety nets, support the private sector, and respond to financial market collapses.

Meanwhile, Ant?nio Guterres, Secretary-General of the United Nations (UN), expressed his intention to provide $2 billion in support related to COVID-19 refugees and others. In a video press conference, he said that support packages are needed to prevent households, businesses, and societies from collapsing. With a G20 leaders' virtual summit scheduled within days, Secretary-General Guterres revealed that he sent a letter to G20 leaders calling for much stronger cooperation in responding to COVID-19.

Guterres also emphasized, "The world faces a common enemy called COVID-19 regardless of nationality, ethnicity, or faith," and said, "We must stop gunfire, shelling, and airstrikes, create corridors for relief, and open windows for diplomacy." He added, "We must end the disgusting wars and fight the disease that is destroying the entire world," stating, "That begins with stopping fighting everywhere. That is what humanity needs now more than ever."

This content was produced with the assistance of AI translation services.