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World heading to biggest economic crisis since the Great Depression, warns IMF
IMF is the latest international body to confirm that the world is slipping into a great economic crisis due to coronavirus outbreak.
The International Monetary Fund has confirmed the fears that the devastation caused by the coronavirus was pushing the world into a deep economic crisis which is likely to be the worst-ever since the Great Depression- the worst economic downturn in the history that started in the US in 1929 and lasted ten years with varying degrees of economic devastations in almost every country in the world.
The IMF said global growth was going to turn negative in 2020 with 170 out of the 180 member countries likely to register a slide in per capita income. It also said that massive fiscal stimulus from governments will be required to get the economies going.
“The global coronavirus pandemic is causing an economic crisis unlike any in the past century and will require a massive response to help in the recovery,” IMF chief Kristalina Georgieva said on Thursday.
“In fact, we anticipate the worst economic fallout since the Great Depression,” she added.
IMF official said the international body only expects a “partial recovery” next year, and which needed to be aided with government-funded “lifelines” for businesses and households if the hope of a recovery were to be entertained.
She added that the worst of coronavirus pandemic was not over adding more uncertainty to the projection of an economic future.
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IMF warning comes amid indications that India’s GDP growth for the current fiscal will likely slow down to 4.8 per cent according to a UN report which also warned of significant adverse global economic impact of the pandemic that has sickened over 1.5 million worldwide. The report also added that the economic fallout could increase global poverty by as much a half a billion.
The Reserve Bank of India (RBI) also made a similar prediction on Thursday saying the global economy was heading into recession in 2020 as the Covid-19 pandemic wrecks havoc on global production, supply chains, trade and tourism.
Indian government has announced a fiscal package worth ₹1.75 lakh crore to mitigate against the all-round economic losses caused by the pandemic and another similar package is expected to be announced soon.
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The government also sanctioned an additional Rs 15,000 crores for as India’s Covid-19 emergency response and health system preparedness package, said the health ministry.
The IMF is set to release its World Economic Outlook for this year and next on Tuesday. It is expected to be grim.
“The bleak outlook applies to advanced and developing economies alike. This crisis knows no boundaries. Everybody hurts,” Georgieva said.
Georgieva said that about $100 billion of investments had been withdrawn from the emerging markets, which was three times more than the investments that had fled during the global financial crisis of 2008.
