Thursday, 29 Jul 2021

Coronavirus: IMF says world recession will be ‘way worse’ than 2008 crisis

The coronavirus pandemic has brought the global economy to a standstill and plunged the world into a recession that will be “way worse” than the global financial crisis a decade ago, the head of the International Monetary Fund said on Friday, calling it “humanity’s darkest hour.”

The IMF’s managing director, Kristalina Georgieva, speaking at a rare joint news conference with the leader of the World Health Organization (WHO), called on advanced economies to step up their efforts to help emerging markets and developing countries survive the economic and health impact of the pandemic.

“This is a crisis like no other,” she told some 400 reporters on a video conference call. “We have witnessed the world economy coming to a standstill. We are now in recession. It is way worse than the global financial crisis” of 2008-2009.

World Bank President David Malpass echoed her outlook in a post on LinkedIn, writing, “Beyond the health impacts from the COVID-19 pandemic, we are expecting a major global recession.”

More than 1 million people worldwide have been infected with COVID-19, the disease caused by the virus, and more than 53,000 have died, a Reuters tally showed on Friday.

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Georgieva said the IMF was working with the World Bank and WHO to advance their call for China and other official bilateral creditors to suspend debt collections from the poorest countries for at least a year until the pandemic subsides.

She said China had engaged “constructively” on the issue, and the IMF would work on a specific proposal in coming weeks with the Paris Club of creditor nations, the Group of 20 major economies and the World Bank for review at the annual Spring Meetings, which will be held online in about two weeks.

“This is, in my lifetime, humanity’s darkest hour – a big threat to the whole world – and it requires from us to stand tall, be united, and protect the most vulnerable of our fellow citizens,” she said.

She said central banks and finance ministers had already taken unprecedented steps to mitigate the effects of the pandemic and stabilize markets, but more work was needed to keep liquidity flowing, especially to emerging markets.

To that end, the IMF’s board in coming days would review a proposal to create a new short-term liquidity line to help provide funds to countries facing problems. Georgieva also urged central banks and particularly the U.S. Federal Reserve to continue offering swap lines to emerging economies.

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