As death toll from coronavirus moves past 2000, the International Monetary Bank chief has described it as the most pressing uncertainty that could impact economic recovery, the International Monetary Fund chief says.
“The coronavirus is our most pressing uncertainty: a global health emergency we did not anticipate in January,” IMF Managing Director Kristalina Georgieva wrote in a blog.
The outbreak of the virus is a stark reminder of how a fragile recovery could be threatened by unforeseen events, the Fund chief said.
She contemplated implications of the unforeseen challenge ahead of a meeting of the Group of Twenty industrialized and emerging market economies (G-20) finance ministers and central bank governors in Riyadh this week.
The leaders, she said, face an uncertain economic landscape.
She envisioned a number of scenarios, depending on how quickly the spread of the virus is contained.
“If the disruptions from the virus end quickly, we expect the Chinese economy to bounce back soon. The result would be a sharp drop in GDP growth in China in the first quarter of 2020, but only a small reduction for the entire year.
“Spillovers to other countries would remain relatively minor and short-lived, mostly through temporary supply chain disruptions, tourism, and travel restrictions.”
“However, a long-lasting and more severe outbreak would result in a sharper and more protracted growth slowdown in China. Its global impact would be amplified through more substantial supply chain disruptions and a more persistent drop in investor confidence, especially if the epidemic spreads beyond China.”
Even in the best-case scenarios, however, the projected rate of global growth is still modest in too many parts of the world, Georgieva remarked.
“And over the medium term, growth is expected to remain below historical averages.”
The world should economic leaders should not create new uncertainties, and called for reduction in trade tenisons.
“I believe there are three areas where the finance ministers and central bank governors can make progress in providing more certainty about future actions during the G-20 meetings in Saudi Arabia: Trade, Climate, and Inequality.”
