The International Monetary Fund has said the coronavirus tragedy which emanated in China called for emergencies as it could worsen global economic recovery.
The Managing Director, IMF, Ms Kristalina Georgieva, said this in a statement on Sunday, after the conclusion of the Group of 20 meeting of finance ministers and Central Bank Governors in Riyadh, Saudi Arabia.
She stated, “We met at a time of particular uncertainty. At the start of the year, global growth appeared to have bottomed out, with signs of stabilisation and expectation of a modest rebound—from 2.9 per cent last year to 3.3 per cent this year.
‘This tentative stabilisation was helped by continued monetary and—in some countries—fiscal easing, as well as by the Phase 1 trade deal between the United States and China. The projected recovery, however, is fragile and predicated on a return to more normal conditions in previously stressed or underperforming economies.
“Since that projection was made, the COVID-19 virus—a global health emergency—has disrupted economic activity in China and could put the recovery at risk. Above all, this is a human tragedy, but it also has negative economic impact.
“I reported to the G20 that even in the case of rapid containment of the virus, growth in China and the rest of the world would be impacted. Of course, we all hope for a V-shaped, rapid recovery—but given the uncertainty, it would be prudent to prepare for more adverse scenarios.
“And there are other risks: high debt levels in countries and corporates could be affected by a rise in risk premia or an unanticipated tightening in financial conditions; and climate change has been associated with an increase in the frequency of natural disasters.”
She said there were three major areas where international cooperation was key.
Georgieva said, “First, we must work together to contain COVID-19—both its human and economic impact—especially if the outbreak turns out to be more persistent and widespread. The IMF stands ready to help, including through our Catastrophe and Containment Relief Trust that can provide grants for debt relief to the poorest, most vulnerable countries.
“Second, cooperation is required to further reduce uncertainty over global trade. Despite the Phase 1 deal, trade tensions have shaved 0.6 percent off this year’s global GDP. It remains essential to move from trade truce to trade peace.
“Third, the world must collaborate to scale up climate change mitigation and adaptation.”
According to her, the COVID-19 was a stark reminder of its interconnections and the need to work together.