IMF chief Kristalina Georgieva on Friday said that the world has “clearly entered a recession” that will be worse than 2009 following the global financial crisis due to the Coronavirus outbreak.
The Coronavirus pandemic has driven the global economy into a downturn that will require massive funding to help developing nations, the IMF chief said in an online press briefing.
With the worldwide economic “sudden stop,” Georgieva said the fund’s estimate “for the overall financial needs of emerging markets is $2.5 trillion.”
But she warned that estimate “is on the lower end.”
.@KGeorgieva: It is now clear that we have entered a recession. We project a rebound in 2021, but only if we contain the virus and prevent liquidity problems from becoming a solvency issue. https://t.co/dg8FHiuftW #COVID19 pic.twitter.com/BIbFaRB48u
— IMF (@IMFNews) March 27, 2020
Governments in emerging markets, which have suffered an exodus of capital of more than $83 billion in recent weeks, can cover much of that, but “clearly the domestic resources are insufficient” and many already have high debt loads.
Over 80 countries, mostly of low incomes, have already have requested emergency aid from the International Monetary Fund, she said.
“We do know that their own reserves and domestic resources will not be sufficient,” Georgieva said, adding that the fund is aiming to beef up its response “to do more, do it better, do it faster than ever before.”
She also welcomed the $2.2 trillion economic package approved by the US Senate, saying “it is absolutely necessary to cushion the world’s largest economy against an abrupt drop the economic activities.”
On Monday, Georgieva had said that the world economy is facing “severe” economic damage from the coronavirus pandemic that could be even more costly than in 2009 and will require an unprecedented response.
Georgieva further called on advanced economies to provide more support to low income countries, which face a massive outflow of capital, and said the IMF stands “ready to deploy all our $1 trillion lending capacity.”
As much of the world faces mass shutdowns, Georgieva warned finance ministers from the Group of 20 nations that the outlook for 2020 “is negative — a recession at least as bad as during the global financial crisis or worse.”
Last week, the World Bank had announced an increased $14 billion of fast-tracking financing to assist companies and countries in the wake of the rapid spread of COVID-19, up from the previously unveiled $12 billion.
The global death toll has reached 27,360. while the confirmed cases of Coronavirus has reached 6,00,000.
Europe is the worst-hit continent with 17,314 fatalities. Italy had the highest numbers of deaths in the world at 8,165, followed by Spain (4,858) and China (3,292).
The US now has more COVID-19 cases than any other country as the novel Coronavirus hit more than 1,04,000 early on Saturday, with the number of fatalities surpassing 1,700.