THE International Monetary Fund (IMF) said that the world has entered a recession due to COVID-19 pandemic. It projects a recovery next year.
"We have reassessed the prospects for growth for 2020 and 2021. It is now clear that we have entered a recession as bad as or worse than in 2009. We do project recovery in 2021," IMF Managing Director Kristalina Georgieva said.
Representing 189 members, the body met virtually to discuss the unprecedented challenge posed to the world by COVID-19.
The key to recovery in 2021, she said, is only if the international community succeeds in containing the virus everywhere and prevents liquidity problems from becoming a solvency issue. "The US is in recession, as is the rest of the advanced economies of the world. And in a big chunk of developed and emerging markets in developing economies. We are working now on our projections for 2020,” Georgieva said.
She said containment is very necessary to come out of this period and step in to recovery.
"Until the virus is not contained, it would be very difficult to go to the lives we love,” she said.
"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”.
The IMF chief said 81 emergency financing requests, including 50 from lower-income countries, have been received. She said current estimate for the overall financial needs of emerging markets is 2.5 trillion dollars.
"We believe this is on the lower end. We do know that their own reserves and domestic resources will not be sufficient," she added.
The G-20, a day earlier, reported fiscal measures totalling some 5 trillion dollars or over 6 per cent of the global GDP.
"Countries are doing all they can on the fiscal and on the monetary front. We have heard from our members' very impressive decisions taken over the last days," the IMF chief said.
'Sorting out the lack of social care in the community needs to be a priority'