The head of the International Monetary Fund, Kristalina Georgieva, warned on Friday that economic forecasts could be revised down even further. The IMF’s April projection for a 3% contraction in the global economy would mark the steepest downturn since the Great Depression of the 1930s.
A continuing trade war between the US and China could jeopardize a recovery from the coronavirus pandemic, she added.
With no immediate medical solutions, more adverse scenarios might unfortunately materialise for some economies… It is the unknown about the behaviour of this virus that is clouding the horizon for projections,” said Georgieva.
On Friday, Georgieva warned that a retreat into protectionism could weaken the prospects for a global recovery at a critical juncture.
Asked how concerned she was that rising US-China tensions could jeopardise the global economy, Georgieva said, “It is hugely important for us to resist what may be a natural tendency to retreat behind our borders.”
Reigniting world trade was critical to ensuring a global economic recovery, she said. “Otherwise,” she said, “costs go up, incomes go down, and we will be in a less secure world.”
Georgieva said the IMF had already provided emergency funding to 50 of the 103 countries that had requested aid. Poor countries remained at high risk given a sharp drop in remittances and falling commodity prices, even if mortality rates from the virus were lower than in some richer countries.
