The Coronavirus pandemic has pushed the world into a recession, with 2020 likely to be worse than the 2007-08 global financial crisis, the International Monetary Fund has said.
The concerns are contained in a preliminary report on the impact of COVID-19 on the global economy, ahead of the World Economic Outlook report to be released Tuesday next week.
‘’The economic damage is mounting across all countries, tracking the sharp rise in new infections and containment measures put in place by governments,’’ IMF said in a blog post.
Although the Breton Wood Institute has withheld economic figures, it said the disruptions caused by the virus are starting to ripple through emerging markets.
It said that after showing little movement early in the year, the latest indices from purchasing manager surveys (PMIs) are pointing to sharp slowdowns in manufacturing output in many countries, reflecting drops in external demand and growing expectations of declining domestic demand.
In the last two weeks in 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,’’ IMF said.
To overcome this pandemic, IMF said, there is a need for a global, coordinated health and economic policy effort.
‘’The IMF—in collaboration with other partners—is doing everything it can to ensure is available to impacted countries through emergency financing, policy advice, and technical assistance,’’ IMF chief economist Gita Gopinath said.
In October, IMF said the global economy was in a synchronized slowdown, downgrading growth for 2019 to three percent, it’s the slowest pace since the global financial crisis.
This is expected to be cut further on COVID-19 effects when the lender releases the World Economic Outlook on April 14.
Although it had projected a modest improvement in global growth to 3.4 per cent in 2020, a downward revision of 0.2 per cent compared to its projection in April last year, the growth is likely to be trimmed further.
Despite this, the IMF believes that recovery is expected in 2021 but this is dependent on how fast the virus is stopped.
They advise that this can be done by prioritizing containment and strengthening health systems everywhere.
The lender is also advocating for extraordinary fiscal actions by governments, such as easing monetary policy, in the best interests of the respective countries and the global economy.
Several countries including Kenya have undertaken the same to spur their economies with the hope of mitigating the economic effects.
