The COVID-19 pandemic has pushed the world into an unprecedented recession hence a need for a globally coordinated health and economic policy effort, notes IMF.
To this end, IMF, in collaboration with other partners, is doing everything possible to ensure rapid support is available to impacted countries through financing, policy advice and technical assistance.
In a blog post, the Fund predicts that with the economic damage mounting across all countries and disruptions caused by the virus starting to ripple through emerging markets, the 2020 recession will be worse than the 2008 global financial crisis.
“With each passing day, the 2008 global financial crisis is increasingly looking like a mere dry run for today’s catastrophe. The short term collapse in global output now underway already seems to rival or exceed that of any crisis recession in the last 150 years,” echoed The Guardian on its International Edition Wednesday.
Further, the IMF cited the economic consequences already impacting the United States with unprecedented speed and severity where in the last two weeks of March, almost 10 million people applied for unemployment benefits.
“Such a sharp and staggering increase has never been seen before, not even at the peak of the global financial crisis in 2009,” the post read in part.
WTO has also warned that trade slumps caused by the coronavirus pandemic were likely to exceed the 2008 global financial crisis with world trade expected to fall by between 13 percent and 32 percent this year as the pandemic disrupts every aspect of the global economy.
“The immediate goal is to bring the pandemic under control and mitigate the economic damage to people, companies and countries. But policy makers must start planning for the aftermath of the pandemic,” said WTO Director General Roberto Azevedo.
The latest indices from Purchasing Manager Surveys (PMIs) are also pointing to sharp slowdowns in manufacturing output in many countries, reflecting drops in external demand and growing expectations of declining domestic demand.
“Worldwide, growth projections have been revised downwards. We had projected that our economy will grow by six percent, but now we are talking about a modest three percent and it can still come lower,” said National Treasury Cabinet Secretary Ukur Yatani Wednesday.
But on a positive note, observes IMF, China, the first country to experience the full force of the disease with confirmed active cases at over 60,000 by mid-February, is seeing a modest improvement in its PMI after sharp declines early in the year, despite weak external demand.
According to IMF, satellite data shows recent increase in nitrogen dioxide concentration over China in March, suggesting a pick-up of industrial and transport activities’.
The recovery in China, albeit limited, is encouraging, suggesting that containment measures could succeed in controlling the epidemic and pave the way for a resumption of economic activity.
“But there is huge uncertainty about the future path of the pandemic and a resurgence of its spread in China and other countries cannot be ruled out,” notes the Fund.
By Mary Musasia