IMF says coronavirus recession will be worse than 2008, as UN appeals for aid for poorest economies

The coronavirus pandemic will cause a global recession in 2020 that could be worse than that seen during the 2008-2009 global financial crisis, but world economic production is expected to recover in 2021, the International Monetary Fund (IMF) reported on Monday. market.

IMF managing director Kristalina Georgieva welcomed extraordinary fiscal actions already taken by many countries to boost health systems and protect affected companies and workers, and measures by central banks to facilitate monetary policy, adding that "more will still be needed, especially on the fiscal front. "


Georgieva released the new perspective after a conference call from finance ministers and central bankers from the Group of the 20 largest economies in the world, who said he agreed with the need for solidarity worldwide.

"The human costs of the coronavirus pandemic are already immeasurable, and all countries need to work together to protect people and limit economic damage," said Georgieva.

More countries are imposing blocking measures to contain the rapidly spreading virus.


Kristalina Georgieva, managing director of the International Monetary Fund, says the recession will be worse than in 2008, but that there should be a significant recovery in 2021. (Jens Meyer / The Associated Press)

Georgieva said the outlook for global growth is negative, and the IMF now expects "a recession at least as bad as during the global financial crisis or worse".


Earlier this month, Georgieva had warned that world growth in 2020 would be below the 2.9% rate seen in 2019, but did not anticipate a recession. Trade wars raised global growth last year to the lowest rate since a 0.7% contraction in 2009.

On Monday, Georgieva said a recovery was expected in 2021, but to achieve it, countries would need to prioritize containment and strengthen health systems.

"The economic impact is and will be severe, but the faster the virus stops, the faster and stronger the recovery," she said.

Georgieva said the IMF would intensify emergency funding enormously, noting that 80 countries have already applied for help and that the IMF was ready to deploy all of its $ 1 trillion in lending capacity.


Advanced economies were generally in better shape to deal with the crisis, but many emerging markets and low-income countries face significant challenges, including external capital flows.


Investors have already removed $ 83 billion from emerging markets since the start of the crisis, the largest capital outflow ever recorded, said Georgieva.

The IMF is particularly concerned about low-income countries in debt difficulties and was working closely with them to address these concerns, he added.

The IMF again asked members to contribute funds to replenish their Disaster Relief and Aid Fund to help the poorest countries.

UN chief Antonio Guterres said on Monday that the world body wants $ 2 billion to help poor countries fight coronavirus and warned that a massive, coordinated package would also be needed to deal with the social and economic impact of the pandemic worldwide.

"The package needs to make families float, make businesses float, keep societies afloat," Guterres told a virtual news conference.

UN Secretary-General Antonio Guterres is calling for a worldwide ceasefire as countries try to fight the coronavirus pandemic. (Salvatore Di Nolfi / Keystone via AP)

"This will require a digit of GDP [gross domestic product] support in the developed world and creation of conditions through the IMF, through swaps between central banks, through the creation of new facilities ", he said.

The spread of COVID-19's highly contagious respiratory disease caused by the coronavirus has drawn comparisons to devastating periods such as World War II, the 2008 financial crisis and the 1918 Spanish flu.

"We need much stronger coordination," said Guterres, adding that he had written for the world's 20 largest economies [G20] and would participate in the virtual meeting later this week.

"Coordination to ensure that not only developed countries can respond effectively to the disease, but that there is massive support for the developing world to not allow the disease to spread like wildfire," he said.

Guterres said he would launch a $ 2 billion humanitarian appeal on Wednesday.

He also called for a global ceasefire so the world can focus on fighting the coronavirus pandemic.

"It is time to end the armed conflict and focus on the real struggle of our lives," said Guterres.

The United Nations has tried to mediate the end of conflicts in countries like Syria, Yemen and Libya, in addition to providing humanitarian assistance to millions of civilians.

"Put an end to the disease of war and fight the disease that is devastating the world," he said. "It starts by stopping the fight everywhere. Now. That's what our human family needs, now more than ever."

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