Observing that the human costs of the coronavirus pandemic are already immeasurable, the IMF on Monday said the world is headed towards a recession at least as bad as during the global financial crisis or worse.
The outlook for global growth for 2020 is negative—a recession at least as bad as during the global financial crisis or worse, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said after a call with G20 Finance Ministers and Central Bank Governors.
"But we expect recovery in 2021," she said. "The human costs of the coronavirus pandemic are already immeasurable, and all countries need to work together to protect people and limit the economic damage," she said.
Georgieva said to get there, it is paramount to prioritise containment and strengthen health systems, everywhere. The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be.
"We strongly support the extraordinary fiscal actions many countries have already taken to boost health systems and protect affected workers and firms. We welcome the moves of major central banks to ease monetary policy. These bold efforts are not only in the interest of each country, but of the global economy as a whole. Even more will be needed, especially on the fiscal front," she noted.
Advanced economies, the IMF Managing Director said, are generally in a better position to respond to the crisis, but many emerging markets and low-income countries face significant challenges.
They are badly affected by outward capital flows, and domestic activity will be severely impacted as countries respond to the epidemic.
"Investors have already removed $83 billion from emerging markets since the beginning of the crisis, the largest capital outflow ever recorded. We are particularly concerned about low-income countries in debt distress—an issue on which we are working closely with the World Bank," Georgieva said.
Asserting that the IMF is concentrating bilateral and multilateral surveillance on this crisis and policy actions to temper its impact, Georgieva said the IMF will massively step up emergency finance— nearly 80 countries are requesting our help—and are working closely with the other international financial institutions to provide a strong coordinated response.
Standing ready to deploy all its $1 trillion lending capacity, she said, adding that the IMF is looking at other available options.
"Several low- and middle-income countries have asked the IMF to make an SDR allocation, as we did during the Global Financial Crisis, and we are exploring this option with our membership," she added.