IMF confirms the global economic recession but projects recovery in 2021

The human and economic impact caused by the coronavirus pandemic triggered a global economic recession, but the International Monetary Fund (IMF) projected recovery in 2021. Representing 189 members, IMF met virtually last Friday to discuss the unprecedented challenge posed to the world by COVID-19.

“We have reassessed the prospects for growth for 2020 and 2021. It is now clear that we have entered a recession as bad or worse than in 2009. We do project recovery in 2021. The advanced economies of the world are in recession, and a big chunk of developed and emerging markets as well. How severe? We are working now on our projections for 2020,” IMF Managing Director Kristalina Georgieva said. The new projections are to be released in the next few weeks. 

Georgieva stressed that Coronavirus containment is necessary to shorten the recession and step into recovery. “We do expect it to be quite deep and we are very much urging countries to step up containment measures aggressively so we can shorten the duration of this period when the economy is in a standstill. Countries are doing all they can on the fiscal, and the monetary front and I am very pleased to say that when we went through countries’ responses, that sense of targeted financial measures is there. It is also very impressive to see the size of these measures, the IMF chief said.

Until the virus is contained, it would be very difficult to go to the lives we love. A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery but can erode the fabric of our societies” Georgieva stated. 

The IMF chief said 81 emergency financing requests, including 50 from lower-income countries, have been received. She also said the current estimate for the overall financial needs of emerging markets is 2.5 trillion dollars. “We believe this is on the lower end. We do know that their reserves and domestic resources will not be sufficient” she added. 

The G-20 reported earlier last week fiscal measures totalling some 5 trillion dollars or over 6 per cent of the global GDP.