COORDINATED and continuous international action will be essential to support vulnerable countries, restore market confidence, contain financial stability risks, and spur global economic recovery from the COVID-19 pandemic, a senior official of the International Monetary Fund (IMF) has said.
“As countries implement necessary quarantines and social distancing practices to contain the pandemic, the world has been put in a Great Lockdown. The magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetimes,” Zhang Tao, deputy managing director of the IMF, told Xinhua in a recent written interview.
“At this point, there is great uncertainty about its severity and length of the economic downturn,” he said.
The global economy is expected to contract sharply by 3 percent this year in a baseline scenario as a result of the pandemic, the worst recession since the Great Depression in the 1930s, according to the IMF’s latest World Economic Outlook (WEO) report released Tuesday.
Advanced economies will contract significantly by 6.1 percent in 2020, and emerging market and developing economies, which typically have growth levels well above advanced economies, will shrink by 1.0 percent, the report showed.
Citing the IMF’s newly-released Global Financial Stability Report (GFSR), Zhang said the global financial system has already been “dramatically impacted” by the pandemic.
“A further tightening of financial conditions and an intensification of the crisis could threaten global financial stability. The risks to the outlook, globally, are certainly on the downside,” he said.
While advanced economies have already absorbed a severe blow, emerging markets and frontier markets could endure a crisis that causes intense economic, financial and social pain, Zhang warned.—AFP