IMF Indicates Downgrade of Economic Outlook... Concerns Over Early Lockdown Lifting in Asia and Europe

[Image source=AP Yonhap News]

[Asia Economy Reporter Hyunjin Jung] Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), hinted at the possibility of downward revisions to the global economic growth forecast. Last month, it was predicted to be -3.0%, but the economic impact of the novel coronavirus disease (COVID-19) is considered to be more severe than expected.

According to major foreign media on the 12th (local time), Georgieva stated at a video conference sponsored by the Financial Times (FT) that "the crisis is still spreading, and the outlook is worsening beyond what we had already viewed pessimistically." She added, "Without medical measures on a global scale, most countries are expected to experience greater economic contraction."

Georgieva also said, "Looking at the data coming from many countries, the situation is worse than the pessimistic forecasts we have already issued," and "there is a high possibility that we will update our forecasts in June." She emphasized, "There will be worse news from the perspective of how we view 2020."

Last month, the IMF projected the global GDP growth rate for this year at -3.0% in its World Economic Outlook. This is the lowest figure since the Great Depression of the 1930s, down 6.3 percentage points from the January forecast. The GDP growth forecast for emerging and developing countries was -1.0%, while advanced economies were expected to contract by -6.1%. South Korea’s economic growth rate for this year was also predicted to be -1.2%.

Furthermore, Georgieva anticipated that the amount of funds needed for emerging and developing countries to overcome the COVID-19 crisis would increase by $2.5 trillion compared to last month’s forecast. She explained, "It is very important to clearly recognize and focus on what protective measures we can provide to these countries," adding, "Only then will liquidity problems not turn into repayment problems."

Meanwhile, on the same day, Changyong Rhee, IMF Director for Asia and the Pacific, and Paul Thompson, Director for Europe, warned that if Asian and European countries lift lockdown measures and resume economic activities too early and too broadly, the human and economic costs could increase.

In a blog post titled "Asia and Europe Emerging from Lockdowns," they acknowledged that citizens in Asian and European countries have borne significant economic and psychological costs due to restrictions on economic activities, and that it is understandable that countries want to ease measures quickly.

However, they pointed out that easing restrictions too quickly could jeopardize the achievements made through suppression measures and lead to additional costs. They advised, "The economies of Asia and Europe must proceed cautiously and resist the impulse to do too much too quickly, risking a resurgence."

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