Sun, 09-Aug-2020
Thursday 16 Jul 2020 , 6:22 am

IMF Chief Warns Global Economy ‘Not Out of the Woods,’ Dangers Lurk

The IMF last month further slashed its 2020 global output forecasts, predicting a 4.9% contraction and weaker-than-expected recovery in 2021.
By SIN Bureau
Share at:

Global economic activity is picking up after an unprecedented decline this year due to the coronavirus pandemic, but a second major wave of infections could trigger more disruptions, the International Monetary Fund’s (IMF) top official said.

Georgieva during the MSC 2019 (Source: Wikipedia)

IMF Managing Director Kristalina Georgieva said the fiscal costs of actions aimed at containing the pandemic and mitigating its economic fallout were driving up already high debt levels, but it was premature to start withdrawing needed safety nets.

“We are not out of the woods yet,” she said in a blog posting ahead of Saturday’s virtual meeting of finance ministers and central bank governors from the Group of 20 major economies.

The IMF last month further slashed its 2020 global output forecasts, predicting a 4.9% contraction and weaker-than-expected recovery in 2021.

Georgieva said $11 trillion in fiscal measures by G20 members and other countries, as well as massive central bank liquidity injections, have put a floor under the global economy.

Even so, dangers lurked, she said, including a major new wave of infections, stretched asset valuations, volatile commodity prices, rising protectionism and political instability.

Some countries lost more jobs in March and April than had been created since the end of the 2008 global financial crisis, and many of those jobs will never return, Georgieva said.

Job losses, bankruptcies and industry restructuring could pose significant challenges for the financial sector, including credit losses to financial institutions and investors, she said.

To ensure stability, continued coordination across central banks and support from international financial institutions was essential, she said. Regulation should also support the flexible use of capital to keep credit lines open for businesses.

“Monetary policy should remain accommodative where output gaps are significant and inflation is below target, as is the case in many countries during this crisis,” she said.

In a report to the G20, the IMF warned that rising protectionism and renewed trade tensions endangered the recovery.

A weak recovery itself raised the chances of disinflation and a prolonged period of low interest rates, which could undermine debt sustainability and financial stability, it said.

Read Here




Neha Mule

Neha writes articles on sectors including medicine, food, materials, and science & technology. A qualified statistician, she has the ability to observe and analyze the trends in global markets and write compelling articles that help CXOs in decision making. She is a bookworm and loves to read fiction, lifestyle, science and technology. Neha comes with 6 years of experience in content writing and editing that involves blog writing, preparation of study materials and OERs.

More from Neha Mule

Smart News, Updates and Insights Drive Smarter Decisions

Smart Industry News is a one stop shop of industry news across the globe. We have a team of experts who provides latest updates on industry news to our readers daily. The news available on our website is general information and does not provide our customers with any legal or professional advice specific to any industry...

sales@smartindustrynews.com
media@smartindustrynews.com

Subscribe to our newsletter
Get the latest in your inbox weekly Sign up for the fully charged newsletter
Follow Us:
© The News and Media Division of The Insight Partners 2019 | All Rights Reserved