Virus could disrupt global recovery: IMF MD

PTI Washington | Updated on November 20, 2020

The head of the International Monetary Fund said on Thursday that the while the US and other major economies turned in better-than-expected economic performances in the third quarter, the world now faces slower momentum with a resurgence in coronavirus cases.

IMF Managing Director Kristalina Georgieva said in a note prepared for a virtual meeting of the leaders of the Group of 20 major economies that significant progress on the vaccines raised hopes of vanquishing the virus that has taken more than a million lives and caused tens of millions of job losses around the world.

The G20 virtual leaders summit, which Saudi Arabia is conducting this week in its role as this year’s head of the G20, will focus on efforts to stabilise the global economy and hopefully, foster a rebound next year.

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Long-term difficulties

Last month, the IMF forecast that the global economy would contract by an historic 4.4 per cent this year and then mount a partial and uneven recovery, with global growth rebounding by 5.2 per cent next year.

“While a medical solution is now in sight, the economic path ahead remains difficult and prone to setbacks,” Georgieva said. “Many risks remain, including the threat that new outbreaks may require more stringent shutdowns,” she said.

Such a development, she wrote in her memo to accompany the IMF’s G20 surveillance report, would mean that growth will be lower, public debt higher and the scars on the long-term potential of the economy more severe.

It is important that governments avoid a premature withdrawal of economic support, Georgieva said. She recommended that major economies consider a synchronised investment in infrastructure as a way to provide jobs.

“The bottomline is that we can build the impetus for growth, jobs and address climate change far more effectively if we work together,” she wrote.

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Published on November 20, 2020

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