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IMF foresees world facing Great Depression since recession

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The head of International Monetary Fund (IMF) recently said that the fatal pandemic coronavirus will push the global economy into country’s Greatest Depression, as the world’s poorest countries will suffer the most.

 

“We anticipate the worst economic fallout since the Great Depression,” IMF Managing Director Kristalina Georgieva said, in remarks previewing next week’s virtual meetings of the 189-nation IMF and its sister lending organisation, the World Bank.

 

The IMF will release an updated world economic forecast on Tuesday that will show just how quickly the coronavirus outbreak has turned what had been expected to be a solid year of growth into a deep downturn.

 

Emerging markets and low-income nations across Africa, Latin America and much of Asia are at high risk, she said. “With weak health systems to begin with, many face the dreadful challenge of fighting the virus in densely populated cities and poverty-stricken slums, where social distancing is hardly an option,” Georgieva said. Investors have grown fearful of leaving their money in emerging economies that could be hit hard by a global recession.

 

“I stress there is tremendous uncertainty around the outlook,” she said. “It could get worse depending on many variable factors, including the duration of the pandemic.”

 

At the IMF we are working 24/7 to support our member countries—with policy advice, technical assistance and financial resources.

 

She said that she and World Bank president David Malpass will pursue at next week’s virtual meetings an agreement to adopt a standstill on debt payments over the next year by the world’s poorest nations, freeing up money they can use for critical health needs.

 

“We are responding to an unprecedented number of calls for emergency financing from over 90 countries so far,” she said.

 

The IMF’s executive board has agreed to double the loan levels it will provide from its emergency facilities that she said should allow the IMF to provide around 100 billion dollars in financing to low-income countries.

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