The world’s economy is suffering from the worst crisis since the Great Depression in the 1930s, and that it will require a massive response to ensure recovery, according to International Monetary Fund (IMF).
According to IMF Chief Kristalina Georgieva, the coronavirus disease (COVID-19) has impacted the economy unlike any in the past century, and that the world must prepare for “the worst economic fallout since the Great Depression.”
With over 2 million cases and more than 170,000 deaths worldwide, COVID-19 has pushed the economy to shut down as nations grapple to prevent its spread. IMF said they expect that around 170 members would experience a decline in their per capita income.
Prior to the pandemic, Georgieva said that IMF was expecting around 160 nations to see rising per capita. The Fund even projected a global growth of 3.3 percent in 2020, and 3.4 percent in 2021.
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Now, she said that even in the best-case scenario, IMF presumes that the economy would only partially recover by 2021—assuming that the virus goes away late this year, and normal businesses resume.
Global banking association Institute for International Finance (IIF) also forecasted a 2.8 percent decline in the global gross domestic product (GDP), a higher percentage compared to the 2.1 percent decline back in 2009. The World Bank, meanwhile, said that COVID-19 could cause the first recession in Africa in 25 years.
In addition, the economy of the US—one of the economically strongest nations in the world—has cut around 17 million jobs since March, with 6.6 million workers filing for unemployment benefits. The US Federal Reserve (Fed) chairman Jerome Powell even said the country’s unemployment rate is moving “with alarming speed,” reaching an all-time low in 50 years.
IMF, however, warns that “it could get worse” because there is still a “tremendous uncertainty around the outlook” and the duration of the pandemic.
Georgieva said that for the world to at least survive this crisis, government need to do more. So far, various countries have already raked up $8 trillion (Dh29.38 trillion) to respond to the economic crisis.
She added the IMF is also prepared to lend $1 trillion (Dh3.67 trillion) to respond to the calls of 90 countries that need emergency financing the most. The Fund’s board has already approved the expansion of emergency lending facilities as well—which will allow them to have about $100 billion (Dh367 billion) to provide debt relief for the poorest countries those countries with unsustainable debt levels.
The Fed, meanwhile, has rolled out lending programs totaling $2.3 trillion (Dh8.45 trillion) to assist various businesses as well as local governments experiencing cash deficiencies.
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