IMF chief: World faces worst economic crisis since Great Depression

The coronavirus pandemic has inflicted an economic crisis unlike any other in the past century and will require a massive response to ensure recovery, IMF chief Kristalina Georgieva said Thursday.

The warnings about the damage inflicted by the virus already were stark, but Georgieva said the world should brace for “the worst economic fallout since the Great Depression.”

The Great Depression was a severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States.

The timing of the Great Depression varied across the world; in most countries, it started in 1929 and lasted until the late 1930s

With nearly 89,000 deaths in 192 countries and territories and the number of cases now surpassing 1.5 million worldwide, much of the global economy has been shut down to contain the spread of the virus.

The International Monetary Fund expects “global growth will turn sharply negative in 2020,” with 170 of the fund’s 180 members experiencing a decline in per capita income, Georgieva said.

Just a few months ago, the fund was expecting 160 countries to see rising per capita income, she said in a speech previewing next week’s spring meetings of the IMF and World Bank, which will be held virtually due to the restrictions imposed due to the COVID-19.

– ‘It could get worse’ –

Even in the best-case scenario, the IMF expects only a “partial recovery” next year, assuming the virus fades later in 2020, allowing normal business to resume as the lockdowns imposed to contain its spread are lifted.

But she added this ominous caution: “It could get worse.”

There is “tremendous uncertainty around the outlook” and the duration of the pandemic, Georgieva said.

The IMF will release its latest World Economic Outlook on Tuesday, with grim forecasts for its members this year and next. In January, the IMF projected global growth of 3.3 percent this year and 3.4 percent in 2021.

But that was a different world.

The US economy has purged 17 million jobs since mid-March, with the latest weekly data issued Thursday showing 6.6 million workers filed for unemployment benefits, and economists projecting a double-digit jobless rate this month.

The World Bank said Thursday the pandemic might cause the first recession in Africa in 25 years.

Researchers at the Institute for International Finance (IIF), a global banking association, expect a 2.8 percent plunge in global GDP, compared to a decline of 2.1 percent in 2009 during the global financial crisis.

That is a sharp reversal from October, when the IIF predicted 2.6 percent growth.

Recovery depends on decisive actions now, Georgieva said. The IMF has $1 trillion in lending capacity and is responding to unprecedented calls from 90 countries for emergency financing.

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