The world is in the face of a devastating impact due to the coronavirus pandemic and has clearly entered a recession, the International Monetary Fund has said, but projected a recovery next year.
“We have reassessed the prospects for growth for 2020 and2021. It is now clear that we have entered a recession as bad or worse than in2009. We do project recovery in 2021,” IMF Managing Director KristalinaGeorgieva told reporters at a news conference.
Georgieva was addressing the press after a meeting ofgoverning body of the IMF, the International Monetary and Financial Committee.Representing 189 members, the body met virtually to discuss the unprecedentedchallenge posed to the world by COVID-19.
The key to recovery in 2021, she said, is only if theinternational community succeeds in containing the virus everywhere and preventliquidity problems from becoming a solvency issue.
“The US is in recession, as is the rest of the advancedeconomies of the world. And in a big chunk of developed and emerging markets indeveloping economies. How severe? We are working now on our projections for2020, Georgieva said in response to a question.
The new projections are expected in the next few weeks.
Stressing that while containment is the main reason for theeconomy to stand still and get into a recession, she said containment is verynecessary to come out of this period and step in to recovery. “Until the virusis not contained, it would be very difficult to go to the lives we love.”
“A key concern about a long-lasting impact of the suddenstop of the world economy is the risk of a wave of bankruptcies and layoffsthat not only can undermine the recovery but can erode the fabric of oursocieties,” the IMF chief said.
To avoid this from happening, many countries have takenfar-reaching measures to address the health crisis and to cushion its impact onthe economy, both on the monetary and on the fiscal side, she said.
The IMF chief said 81 emergency financing requests,including 50 from lower-income countries, have been received. She said currentestimate for the overall financial needs of emerging markets is 2.5 trilliondollars.
“We believe this is on the lower end. We do know that theirown reserves and domestic resources will not be sufficient,” she added.