The International Monetary Fund (IMF) Managing Director, Kristalina Georgieva (pictured) has revealed that the Fund’s latest assessment has downgraded growth projection for the world economy—a contraction of 4.9 percent for 2020.
“The recession will be deeper in 2020 and the recovery slower in 2021 than expected in our April forecast. We project a cumulative loss to the global economy of over $12 trillion over two years (2020-21)—and 10 percent of this total loss (about $1.2 trillion) stems from Latin America,” Georgieva said.
She added: “This is truly a global crisis, with nearly 95 percent of countries projected to face negative per capita income growth in 2020. Emerging markets and developing economies (excluding China) are projected to take a bigger hit to GDP growth than advanced economies in 2020-21. This translates into a risk of slowing down or even reversing the process of poverty reduction we have witnessed and enjoyed in recent years—and also slowing down the convergence between emerging market and advanced economies.
There are some signs of recovery, but it is going to be partial and uneven across sectors, countries and regions. While 75 percent of the world is reopening, we are not yet out of the woods. We are learning how to recover while we are still short of the scientific breakthrough towards a vaccine that we count on so much. Policymakers must remain vigilant, working towards recovery even as the pandemic remains with us.”
She made the remarks yesterday at Conference of Latin American and Caribbean Leaders Organized by the Government of Spain.
She added that countries’ monetary and fiscal actions have been strong and effective in helping prevent a massive wave of bankruptcies and unemployment.
“It worked—it put a floor under the world economy. Globally, fiscal actions now amount to about US$10.7 trillion; and monetary policy measures amount to over $6 trillion. A response like no other to a crisis like no other,” she said.
