WASHINGTON: The global downturn sparked by the coronavirus pandemic will not be as bad as originally feared, IMF Chief Kristalina Georgieva said on Wednesday, but she also warned that the “crisis is far from over”.
“The picture today is less dire … allowing for a small upward revision to our global forecast for 2020,” she said in a speech ahead of IMF-World Bank autumn meetings next week, when the IMF is due to present its updated forecasts.
In June, the Washington-based crisis lender projected a nearly five percent contraction of global GDP, but results in the second and third quarters were better than expected.
Georgieva credited “extraordinary policy measures that put a floor under the world economy” which amounted to $12 trillion in fiscal support to households and firms.
But she warned governments not to prematurely withdraw the help they have provided, since the outlook for next year is mixed and rife with uncertainties and risks.
After more than a million deaths, “this calamity is far from over. All countries are now facing what I would call ´The Long Ascent´ — a difficult climb that will be long, uneven, and uncertain,” Georgieva said.
In the United States and Europe the downturn, though painful, was not as bad as economists feared at the outset, and China is seeing “a faster-than-expected recovery.”
But the news elsewhere is bad: “In low-income countries, the shocks are so profound that we face the risk of a ´lost generation,´” she said.
“There is also now the risk of severe economic scarring from job losses, bankruptcies, and the disruption of education.”
