COVID-19 crushes hopes for stronger growth: IMF chief

COVID-19 crushes hopes for stronger growth: IMF chief

Agency News

The global spread of the novel coronavirus has crushed hopes for stronger growth this year and will hold 2020 global output gains to their slowest pace since the 2008-2009 financial crisis, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said on Wednesday.

The IMF now expects 2020 world growth to be below the 2.9% rate for 2019, and revised forecasts will be issued in the coming weeks, Georgieva told a news briefing. Trade wars pushed global growth last year to the lowest rate since a 0.7% contraction in 2009.

The changed forecast would represent a more than 0.4-percentage-point drop from the 3.3% growth the IMF had estimated for 2020 in January as U.S.-China trade tensions eased. "Global growth in 2020 will dip below last year's levels, but how far it will fall and how long the impact will be is still difficult to predict," Georgieva said.

She declined to say whether the escalating health crisis could push the world into a recession. The IMF is making available $50 billion in emergency funding to help poor and middle-income countries with weak health systems respond to the epidemic, she said after a call with the IMF's steering committee.

About $10 billion of that can be accessed by the poorest countries at zero interest for up to 10 years, while many middle-income countries have access to a pool of about $40 billion at low interest for up to five years.

Ecuador used the latter program in 2016 to get a $364 million loan after a devastating earthquake. But larger emerging-market countries such as Brazil, China, and India are ineligible for such assistance, as are countries where the IMF has declared debt to be unsustainable, including Argentina.