Head of International Monetary Fund Kristalina Georgieva has warned that the damage done to the global economy by the COVID-19 coronavirus pandemic could be as bad or worse than the global financial crisis in 2008 and lead to a recession.
"The outlook for global growth: for 2020 it is negative - a recession at least as bad as during the global financial crisis or worse. But we expect a recovery in 2021", Georgieva said.
She also noticed that advanced economies stand a better chance to properly respond to the coronavirus' impact, while emerging markets could be hit really hard by the outbreak. Georgieva stressed that the best thing to do for economies to recuperate after the new shock is to focus on containing the disease and strengthening national healthcare systems.
"The human costs of the coronavirus pandemic are already immeasurable and all countries need to work together to protect people and limit the economic damage", Georgieva said.
The IMF chief also praised the extraordinary fiscal actions as well as other measures to ease monetary policies that have been undertaken by several countries to reduce the impact of the pandemic on their economies. Georgieva noted, however, that more measures could be required from governments in terms of fiscal policies.
Impact of Coronavirus on Economies
The coronavirus outbreak and government measures aimed at coping with it have impeded global economic activity, forcing many businesses, especially in the travel, restaurant, and hospitality industries, to temporarily close their establishments, while some major factories have had to halt their operations. A number of countries, such as the US, France, and the UK have started announcing aid programmes to support national businesses in these troubled times, including credit backstops, government lending, and reducing credit rates.