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IMF on coronavirus and the global economy – damage this year; sharp, rapid rebound

Comments from International Monetary Fund managing director Kristalina Georgieva over the weekend on the impact on the global economy

  • could damage global economic growth this year
  • a sharp and rapid economic rebound could follow
  • “There may be a cut that we are still hoping would be in the 0.1-0.2 percentage space”
  • full impact of the spreading disease would depend on how quickly it was contained – “I advise everybody not to jump to premature conclusions. There is still a great deal of uncertainty. We operate with scenarios, not yet with projections, ask me in 10 days”
  • If the disease is “contained rapidly, there can be a sharp drop and a very rapid rebound”, in what is known as the V-shape

IMF’s Georgieva: Uncertain situation is the new normal

IMF chief, Kristalina Georgieva, speaks in Davos

Kristalina Georgieva
  • Uncertainty is the major downside risk for global economy
  • Wants to see governments stepping up action
  • The world is more shock-prone as it is interconnected currently
  • We are in a better place at the start of 2020 than in 2019
  • Sees signs of trade, industrial slowdown bottoming out
  • Consensus is that global rates will be low for longer
  • Fed, PBOC have policy space
  • Other countries need to look at fiscal tools more closely
Low growth, low rates. That is the new landscape that the world will have to deal with. And with central banks still injecting so much stimulus and being so cautious, we shouldn’t expect to see a crisis like the one in 2008-09 materialise.
However, any chance of major economies and the world returning back to what is perceived to be “normal” is probably not going to happen either.