Millennium Post

Global growth to 'dip below' last year's rate: IMF chief

Washington DC: The new coronavirus epidemic poses a "serious threat" and will slow growth in the world economy to below the 2.9 per cent posted last year, IMF chief Kristalina Georgieva said Wednesday.

The COVID-19 outbreak "is no longer regional issue, it is a global problem (that) calls for global response," Georgieva told reporters.

The epidemic's impact on confidence and steps to contain it are impacting economic activity, with the result that "global growth in 2020 will dip below last year's levels," she said.

The IMF in January forecast growth this year of 3.3 percent, which means at least a half point will be lost to the virus.

But "how far it will fall and how long the impact will be is still difficult to predict," she said.

Georgieva said the fund's analysis had assumed the virus would be largely confined to China, which would have led to a sharp but short economic slowdown, followed by a quick recovery.

"Unfortunately over past week we've seen a shift to a more adverse scenario for the global economy," due to the "sheer geographic spread of the epidemic around the world," impacting a third of the IMF's 189 member countries. The virus has infected over 93,000 people worldwide and killed more than 3,200 people, mainly in China.

Georgieva and World Bank President David Malpass spoke to reporters after a conference call of finance officials from the member nations, who directed the IMF "to use all its available financing instruments to help member countries in need."

"We are determined to provide the necessary support to mitigate the impact, especially on the most vulnerable people and countries," the statement from the governing body, the IMFC, said. Georgieva said the Washington-based development lender has $1 trillion in overall financing capacity, including $50 billion available without a formal IMF programme, and $10 billion in no-interest funds for the poorest countries.

The World Bank on Tuesday announced it had $12 billion available to help countries respond to the coronavirus threat.

Malpass told reporters "the speed and breadth of the response is crucial to its effectiveness."

Hong Kong's business outlook hit a record low in February, according to data released on Wednesday, as the coronavirus outbreak added to the financial hub's troubles following months of political turmoil.

The Purchasing Managers' Index (PMI) for the city's economy plunged to its lowest mark since the gauge began, worse than the SARS outbreak in 2003 and the global financial crisis in 2007-2008.

Hong Kong's economy is reeling from the US-China trade war, pro-democracy protests last year and now the coronavirus -- a triple whammy that has created a situation Financial Secretary Paul Chan described as "exceptionally austere" as he delivered his annual budget last week.

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