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27 Mar, 2020 15:44

World economy has entered a recession 'as bad or worse' than the global financial crisis – IMF chief

World economy has entered a recession 'as bad or worse' than the global financial crisis – IMF chief

IMF chief Kristalina Georgieva said it’s “clear” that the global economy has “entered recession” due to the evolving Covid-19 pandemic, and that the organization is working on projections to assess how severe it will be.

Georgieva said she expects the recession to be “quite deep.” Recovery is projected for 2021, but only if the virus can be contained, she said.

She said countries needed to step up their response measures aggressively, adding that the IMF has received a large number of requests for emergency financing. Georgieva said the international body has received pledges from Britain, Japan, and China for a “catastrophic containment and relief trust” for the poorest countries and that she hopes more will follow.

A key concern about a long- lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery but can erode the fabric of our societies.

She predicted that emerging markets will need assistance of $2.5 trillion, and that estimate is “on the low end.” A practical approach will be needed to prevent indebted countries from “falling off the cliff,” she said.

Speaking about the US in particular, Georgieva said it will be absolutely necessary to cushion the world’s biggest economy and said the $2 trillion package of measures already agreed on by the Trump administration was a welcome step.

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She said it is important to protect workers and families from sudden loss of income, and that it is also critical to protect companies.

The IMF boss also confirmed the body is working closely with the World Health Organization (WHO) to raise global production of critical medical equipment. She said China is an important source of health supplies and is stepping up production.

She predicted that the global recovery will be staggered, much like the way the pandemic hit countries one after the other.

Global confirmed cases of the Covid-19 virus surpassed 550,000 on Friday, with more than 25,000 deaths, according to a Johns Hopkins University tally. Europe is the current epicenter of the pandemic, with countries including Italy, France, Spain, and the UK in national lockdown mode in a bid to contain the spread.

The WHO said this week that the US, which has more confirmed cases than any other individual country, has the potential to become the next epicenter.

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