IMF compares coronavirus-hit world economy to Great Depression

IMF chief Kristalina Georgieva called governments, leaders and organisations across the world to act decisively and act together, to protect lives and livelihoods.

IMF world economy outlook
IMF chief Kristalina Georgieva said we are confronted with a crisis like no other | Photo - Kristina Georgieva/Twitter

Due to the COVID-19 pandemic, the global output is expected to turn sharply negative in 2020 and see the worst economic fallout since the Great Depression, according to the International Monetary Fund (IMF) chief Kristalina Georgieva.

“Just three months ago, we expected positive per capita income growth in over 160 of our (180) member countries in 2020. Today, that number has been turned on its head: we now project that over 170 countries will experience negative per capita income growth this year,” she said, a week before the IMF’s Springs Meeting, which will be held virtually because of the global lockdown.

“It is already clear, however, that global growth will turn sharply negative in 2020, as you will see in our World Economic Outlook next week. In fact, we anticipate the worst economic fallout since the Great Depression,” she said.

The Great Depression refers to the deep economic depression triggered by a major stock market crash in the US and led to a long depression that lasted for 2-3 years in varying degrees in various countries around the world.

Noting that coronavirus disease COVID-19 has disrupted social and economic order at lightning speed and on a scale not seen, the IMF chief said we are confronted with a crisis like no other and called governments, leaders and organisations across the world to act decisively and act together, to protect lives and livelihoods.

She pointed to two key factors that would affect emerging markets in Africa, Asia and other parts of the world — the withdrawal of USD 100 billion of foreign investments from these markets and the dwindling remittances back to these countries.

Related news: Indian economy loses $4.64 billion on each COVID-19 lockdown day

Noting the USD 8 trillion worth steps taken by various countries, Georgieva urged governments to do more to provide “lifelines” for businesses and households and mentioned four priorities that outlined the roadmap for continuing healthcare and support services while looking for options to fast recovery.

The IMF will release its World Economic Outlook on Tuesday with forecasts for countries for this year and the next.

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