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Coronavirus economic impact ‘will be severe,’ at least as bad as Great Recession, says IMF

March 23, 2020, 6:31 PM UTC

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The International Monetary Fund said it expects a global recession this year that will be at least as bad as the downturn during the financial crisis more than a decade ago, followed by a recovery in 2021.

Nearly 80 countries have asked the Washington-based IMF for emergency finance, Managing Director Kristalina Georgieva said in a statement Monday following a conference call of Group of 20 finance ministers and central bankers. Georgieva said the fund strongly supports extraordinary fiscal actions already taken by many countries and welcomes the moves of major central banks to ease monetary policy.

“These bold efforts are not only in the interest of each country, but of the global economy as a whole,” she said in the statement. “Even more will be needed, especially on the fiscal front.”

The statement followed the G-20 officials convening an emergency call on Monday to discuss the global economic fallout from the pandemic and work toward a joint response. Also Monday the Federal Reserve unveiled a sweeping series of measures including for households and employers that push it deeper into uncharted territory.

The IMF said it’s working closely with other international financial institutions to provide a strong coordinated response, and reiterated that it’s ready to deploy all of its $1 trillion lending capacity.

To have a rebound next year, “it is paramount to prioritize containment and strengthen health systems — everywhere,” Georgieva said. “The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be.”

The IMF noted that major central banks that have initiated bilateral swap lines with emerging economies may need to provide more. The fund said it’s also exploring a possible proposal that would help facilitate a broader network of swap lines, including through an IMF-swap type facility.

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