By Darryl Coote & Danielle Haynes
International Monetary Fund Managing Director Kristalina Georgieva said she and leaders at the World Health Organization agree that the best way to fix the economy is to focus on stopping the spread of COVID-19. File Photo by Stephen Shaver/UPI | License Photo
April 3 (UPI) -- The best way to limit the coronavirus pandemic's impact on the global economy is to focus on mitigating the spread of the disease, world health and financial leaders said Friday, warning that the current crisis is "way worse" than the 2008 financial crisis.
World Health Organization Director-General Tedros Ghebreyesus said countries should continue to focus on testing, isolating and treating every case of COVID-19, and trace every contact those patients have had. They should not relax pressure on battling the virus.
"If countries rush to lift restrictions too quickly, the virus could resurge and the economic impact could be even more serious and prolonged," he said during a news conference in Geneva. "Financing the health responses, therefore, is an essential investment not just in saving lives but in the longer-term social and economic recovery."
Countries across the globe have instituted varying levels of stay-at-home or shelter-in-place orders for non-essential businesses in an effort to keep people home and halt the spread of the coronavirus. With some businesses shuttering or losing sales, millions are losing their jobs, throwing the world economy into chaos.
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In the United States, an additional 6.6 million people filed for unemployment benefits last week, the largest single-week increase in the country's history.
Meanwhile, the virus has sickened more than 1 million people worldwide and killed at least 58,000, according to figures at Johns Hopkins University.
Ghebreyesus was joined at Friday's news conference by International Monetary Fund Managing Director Kristalina Georgieva. She described the current economic climate as "a crisis like no other."
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"We have witnessed he world economy coming to a standstill. We are now in a recession. It is way worse than the global financial crisis.
"This is, in my lifetime, humanity's darkest hour; a big threat to the whole world. And it requires from us to stand tall, be united and protect the most vulnerable of our fellow citizens on this planet."
Georgieva said the IMF has $1 trillion at its disposal to assist the most vulnerable countries. She said at least 90 countries have applied for assistance. She said countries should use the funds to focus on paying doctors and nurses, and purchasing medical supplies needed to fight the pandemic.
"Our main preoccupation in this crisis is to rapidly step up financing for countries, especially emerging markets, developing countries that are faced with very significant and growing needs," she said.
The Asian Development Bank said Friday that the pandemic could cost the world between $2 trillion and $4.1 trillion, equaling between 2.3 percent and 4.8 percent of global GDP.
The figure is a stark increase from the $347 billion at the top end, or equivalent to 0.4 percent of global GDP, the Manila-based regional development bank predicted on March 6.
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The bank also revised down its growth forecast for Asia to 2.2 percent from the 5.5 percent it had predicted in September. Assuming the pandemic ends, it expects growth to rebound to 6.2 percent next year.
However, ADB Chief Economist Yasuyuki Sawada admitted that these numbers could be off depending on how the world reacts to the pandemic, calling on world leaders to implement measures to lessen the virus' impact on the markets.
"The evolution of the global pandemic -- and thus the outlook for the global and regional economy -- is highly uncertain," Yasuyuki said in a statement. "Growth could turn out lower, and the recovery slower, than we are currently forecasting. For this reason, strong and coordinated efforts are needed to contain the COVID-19 pandemic and minimize its economic impact, especially on the most vulnerable."
For China specifically, the bank sees its recent contraction in industry, services, retail sales and investment to drag growth down to 2.3 percent this year though with expectations it will rebound to 7.3 percent in 2021.
Excluding the industrialized economies of Hong Kong, South Korea, Singapore and Taipei, growth in developing Asia was revised down to 2.4 percent from 5.7 percent last year.
The report blames the slow growth not on Asia but on the "deteriorating external environment with growth stagnating or contracting in the major industrial economies of the United States, Euro area and Japan."
The report follows the World Bank forecast for East Asia, the Pacific and China on Monday that projected growth to slow this year to 2.1 percent in the base-line scenario or -0.5 percent at the lower-case scenario depending on how long the pandemic lasts. The region sustained a 5.8 percent growth in 2019.
Global downturn due to coronavirus 'way worse' than global financial crisis -IMF
CREDIT: REUTERS/YURI GRIPAS
The coronavirus pandemic has brought the global economy to a standstill and plunged the world into a recession that will be "way worse" than the global financial crisis a decade ago, the head of the International Monetary Fund said on Friday.
By Andrea Shalal and Stephanie Nebehay
WASHINGTON/GENEVA, April 3 (Reuters) - The coronavirus pandemic has brought the global economy to a standstill and plunged the world into a recession that will be "way worse" than the global financial crisis a decade ago, the head of the International Monetary Fund said on Friday.
IMF Managing Director Kristalina Georgieva, speaking at a rare joint news conference with the leader of the World Health Organization, called on advanced economies to step up their efforts to help emerging markets and developing countries survive the economic and health impact of the pandemic.
"This is a crisis like no other," she told some 400 reporters on a video conference call. "We have witnessed the world economy coming to a standstill. We are now in recession. It is way worse than the global financial crisis" of 2008-2009.
More than 1 million people have been infected with COVID-19, the disease caused by the virus, and more than 53,000 have died, a Reuters tally showed on Friday.
The coronavirus pandemic has brought the global economy to a standstill and plunged the world into a recession that will be "way worse" than the global financial crisis a decade ago, the head of the International Monetary Fund said on Friday.
By Andrea Shalal and Stephanie Nebehay
WASHINGTON/GENEVA, April 3 (Reuters) - The coronavirus pandemic has brought the global economy to a standstill and plunged the world into a recession that will be "way worse" than the global financial crisis a decade ago, the head of the International Monetary Fund said on Friday.
IMF Managing Director Kristalina Georgieva, speaking at a rare joint news conference with the leader of the World Health Organization, called on advanced economies to step up their efforts to help emerging markets and developing countries survive the economic and health impact of the pandemic.
"This is a crisis like no other," she told some 400 reporters on a video conference call. "We have witnessed the world economy coming to a standstill. We are now in recession. It is way worse than the global financial crisis" of 2008-2009.
More than 1 million people have been infected with COVID-19, the disease caused by the virus, and more than 53,000 have died, a Reuters tally showed on Friday.
Georgieva that the IMF was working with the World Bank and WHO to advance their call for China and other official bilateral creditors to suspend debt collections from the poorest countries for at least a year until the pandemic subsides.
She said China had engaged "constructively" on the issue, and the IMF would work a specific proposal in coming weeks with the Paris Club of creditor nations, the Group of 20 major economies and the World Bank for review at the annual Spring Meetings, which will be held online in about two weeks.
Emerging markets and developing economies were hard hit by the crisis, Georgieva said, noting that nearly $90 billion in investments had already flowed out of emerging markets, far more than during the financial crisis. Some countries were also suffering from sharp drops in commodity prices.
More than 90 countries - nearly half the IMF's 189 members - have asked for emergency funding from the Fund to respond to the pandemic, she said.
The IMF and WHO have called for emergency aid to be used mainly to strengthen health systems, pay doctors and nurses and buy protective gear.
Georgieva said the Fund stood ready to use as much of its "war chest" of $1 trillion in financing capability as needed.
The IMF has begun disbursing funds to requesting countries, including Rwanda, with requests from two additional African nations to be reviewed on Friday, she said.
"This is, in my lifetime, humanity's darkest hour - a big threat to the whole world - and it requires from us to stand tall, be united, and protect the most vulnerable of our fellow citizens," she said.
She said central banks and finance ministers had already taken unprecedented steps to mitigate the effects of the pandemic and stabilize markets, but more work was needed to keep liquidity flowing, especially to emerging markets.
To that end, the Fund's board in coming days would review a proposal to create a new short-term liquidity line to help provide funds to countries facing problems. She also urged central banks and particularly the U.S. Federal Reserve to continue offering swap lines to emerging economies.
(Reporting by Andrea Shalal in Washington and Stephanie Nebehay in Geneva Editing by Sonya Hepinstall)
She said China had engaged "constructively" on the issue, and the IMF would work a specific proposal in coming weeks with the Paris Club of creditor nations, the Group of 20 major economies and the World Bank for review at the annual Spring Meetings, which will be held online in about two weeks.
Emerging markets and developing economies were hard hit by the crisis, Georgieva said, noting that nearly $90 billion in investments had already flowed out of emerging markets, far more than during the financial crisis. Some countries were also suffering from sharp drops in commodity prices.
More than 90 countries - nearly half the IMF's 189 members - have asked for emergency funding from the Fund to respond to the pandemic, she said.
The IMF and WHO have called for emergency aid to be used mainly to strengthen health systems, pay doctors and nurses and buy protective gear.
Georgieva said the Fund stood ready to use as much of its "war chest" of $1 trillion in financing capability as needed.
The IMF has begun disbursing funds to requesting countries, including Rwanda, with requests from two additional African nations to be reviewed on Friday, she said.
"This is, in my lifetime, humanity's darkest hour - a big threat to the whole world - and it requires from us to stand tall, be united, and protect the most vulnerable of our fellow citizens," she said.
She said central banks and finance ministers had already taken unprecedented steps to mitigate the effects of the pandemic and stabilize markets, but more work was needed to keep liquidity flowing, especially to emerging markets.
To that end, the Fund's board in coming days would review a proposal to create a new short-term liquidity line to help provide funds to countries facing problems. She also urged central banks and particularly the U.S. Federal Reserve to continue offering swap lines to emerging economies.
(Reporting by Andrea Shalal in Washington and Stephanie Nebehay in Geneva Editing by Sonya Hepinstall)
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