IMF head warns global recovery unlikely by end of next year

Kristalina Georgieva said fund is likely to revise GDP forecast for this year down further

(FILES) In this file photo taken on March 4, 2020, IMF Managing Director Kristalina Georgieva speaks at a press briefing in Washington, DC, on March 4, 2020. The global coronavirus pandemic is causing an economic crisis unlike any in the past century and will require a massive response to ensure recovery, IMF chief Kristalina Georgieva said on april 9, 2020. The warnings about the damage inflicted by the virus already were stark, but Georgieva warned that the world should brace for "the worst economic fallout since the Great Depression."
 / AFP / NICHOLAS KAMM

The global economy will take far longer to recover fully from the shock caused by Covid-19 than initially expected, the head of the International Monetary Fund said.

Managing director Kristalina Georgieva said the Fund was likely to revise downwards its forecast for a 3 per cent contraction in GDP in 2020, with only a partial recovery expected next year instead of the 5.8 per cent rebound initially forecast.

In an interview with Reuters, she said data from around the world was worse than previously thought. “That means it will take us much longer to have a full recovery from this crisis,” she said.

In April, the global lender forecast that business closures and lockdowns to slow the spread of the virus would throw the world into the deepest recession since the Great Depression of the 1930s. Data reported since then points to “more bad news”, Ms Georgieva said earlier this month.

The IMF is due to release new global projections in June.

Asked about renewed tension between the United States and China – the world’s two largest economies – Ms Georgieva said she was urging member countries to maintain open communication and trade flows that had underpinned global growth for decades.

“We do need to keep trade flows open, especially for medical supplies, food and, longer-term, to find a pathway to overcome what is happening now with this crisis,” Ms Georgieva said. “We want to continue to build this more prosperous future for all by overcoming the scarring that may come from this crisis.”

Tension between the United States and China has spiked in recent weeks, with officials on both sides suggesting a hard-won deal that defused a bitter 18-month trade war could be abandoned months after it was signed.

Ms Georgieva issued a warning against retreating into protectionism as a result of the crisis.

“We should not turn away from what has worked for people everywhere: a division of labour and collaboration and trade, which allows the costs of goods and services to go down, allows incomes to go up and allows poverty within countries and across countries to retreat,” she said.

The IMF has provided emergency financing to 56 countries since the crisis began and will decide on 47 additional requests as quickly as possible, Ms Georgieva said.

An IMF spokesman said about $21 billion (Dh77.12bn) in emergency financing, which carries very low interest rates, had been disbursed so far.

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