Coronavirus could damage global growth in 2020, says IMF

* As world’s economy sticks with low growth, interest rates, inflation

Web Editor | ConsumerConnect

The Coronavirus epidemic could damage global economic growth this year, the Head of the International Monetary Fund (IMF) said Sunday, February 16, but added that a sharp and rapid economic rebound could follow, agency report says.

“There may be a cut that we are still hoping would be in the 0.1─0.2 percentage space,” Kristalina Georgieva, Managing Director of IMF, told the Global Women’s Forum, in Dubai, United Arab Emirates (UAE).

She said the full impact of the spreading disease that has already killed over 1,600 people would depend on how quickly it was contained.

“I advise everybody not to jump to premature conclusions. There is still a great deal of uncertainty.

“We operate with scenarios, not yet with projections, ask me in 10 days,” Georgieva said. In its January 2020 update to the World Economic Outlook, the IMF lowered global economic growth forecast in 2020 by a 0.1 percentage point to 3.3 percent, following a 2.9 percent growth the previous year, the lowest in a decade.

The IMF Chief said it was “too early” to assess the full impact of the epidemic, but acknowledged that it had already affected sectors, such as tourism and transportation worldwide.

“It is too early to say because we don’t yet quite know what the nature of this virus is. We don’t know how quickly China will be able to contain it.

“We don’t know whether it will spread to the rest of the world,” she said.

If the disease is “contained rapidly, there can be a sharp drop and a very rapid rebound”, in what is known as the V-shaped impact, she said.

Compared to the impact of the Severe Acute Respiratory Syndrome (SARS) in 2002, she said China’s economy then made up just 8.0 percent of the global economy.

It was learnt that now, that figure is 19 percent.

She said the trade agreement between the United States and China, the world’s first and second economies, had reduced the impact of the disease on the global economy.

But the world should be concerned “about sluggish growth” impacted by uncertainty, said the IMF Managing Director.

“We are now stuck with low productivity growth, low economic growth, low-interest rates and low inflation,” she told the Dubai forum, also attended by Ivanka, daughter of United States President Donald Trump, and Theresa May, former British Prime Minister.

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