Washington: More than 100 countries have turned to the International Monetary Fund (IMF) for financial support to cope with the economic fallout from the COVID-19 coronavirus pandemic, the institution’s managing Director has said.
“We meet during exceptional times. And exceptional times call for exceptional action,” Kristalina Georgieva said following a virtual edition of the Fund’s annual spring meeting Tursday.
“More than ever, we must work together to respond to this unprecedented crisis and prepare for recovery,” she said.
Of the 102 nations that have approached the IMF for help, 15 – including El Salvador, Ecuador, Madagascar, Rwanda and Togo – have already seen their applications approved, while Fund officials are expected to decide on dozens more applications by the end of April.
The Fund’s latest economic forecast, released this week, showed a global contraction of 3 per cent in 2020, compared with a 0.1 per cent decline in 2009 as a result of the financial meltdown.
And the IMF’s predictions for individual countries are even more alarming.
The US is set to see its GDP shrink 5.9 per cent, while Euro-zone GDP will shrink 7.5 per cent and Japan’s economy will retreat 5.2 per cent.
“With the peak of the outbreak still ahead, many economies will require significant fiscal outlays to tackle the health crisis and minimize bankruptcies and job losses, while facing mounting external financing needs,” the IMF chief said Thursday.
While the IMF foresees a “partial recovery” in 2021, the just-concluded virtual assembly was dominated by discussions about the shape of the economic trajectory under the influence of COVID-19.
The pessimistic scenario is described as “L” denoting a sharp decline followed by persistent recession. Optimists, meanwhile, suggest the economy’s steep fall will quickly give way to a strong rebound, represented by a “V” shape.
The in-between case, “U” would include a significant trough before the recovery begins.