The chief of the International Monetary Fund (IMF) has shared a view that the global economic recovery would take much longer than previously expected by experts as the coronavirus pandemic impact is now far worse than the initial projection.
The rising political tensions between two world’s largest economies, Washington and Beijing amid the economic shock triggered by the virus spread has further caused a major challenge to the reopening of global trade and markets. With this development, the chief warned the danger of protectionism in the future.
Global Economy Recovery Worse than Expectation
Managing Director of the IMF, Kristalina Georgieva said the international financial institution would revise downward its forecast for a 3% contraction in GDP in 2020 since data across the countries showed that the pandemic impact on the global economy was worse than expected.
Citing that only a partial recovery next year instead of the initial expectation of 5.8% rebound was likely, she stated, “Obviously that means it will take us much longer to have a full recovery from this crisis.”
In April, the global lenders warned that the prolonged global lockdown that forced to shut down business operations across countries would roll the global economy into the deepest recession since the 1930s Great Depression. Georgieva hinted earlier this month about “more bad news,” data of economic projection.
Anticipating the escalation in the virus impact on the global economy, an IMF spokesman said some $21 billion in emergency financing, which carries very low-interest rates, had been disbursed thus far. Georgieva said the IMF set off plans to provide grants to help the poorest countries cover their debt service payments or waive off their existing debts.
Danger of Protectionism
The IMF, which aims to foster financial stability and facilitate trade, has put concerns since the tension between Washington and Beijing renewed recently and it was worried the trade war between the two largest economies could lead to the condition of economic protectionism. With this rising tension on both sides, it was expected that the hard-won trade deal, which was finalized for the phase-1 agreement could be perhaps abandoned.
Responding to a question on the emerging tension, Georgieva urged member countries to maintain open communication and trade flows that had been severely hampered by the virus outbreak.
She insisted, “We do need to keep trade flows open, especially for medical supplies, food, and longer-term to find a pathway to overcoming what is happening now with this crisis,” adding that “We want to continue to build this more prosperous future for all by overcoming the scarring that may come from this crisis.”
Warning against retreating into protectionism as a result of the crisis, Georgieva emphasized, “We should not turn away from what has worked for people everywhere: a division of labor 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.”
I’m Roshan, a journalist, blogger and music lover. I like covering global news related to finance, business and technology. Focusing on the collection of true and reliable information, I rely on working by conducting interviews with business leaders and talking to the inside sources of companies.
You can contact me: [email protected]