US, WASHINGTON (ORDO NEWS) —
Kristalina Georgieva, head of the International Monetary Fund, said the updated forecast for the global economy, which will be published in June, will be “worse than the pessimistic forecast” published in April. Then, IMF experts said that coronavirus would deliver the most powerful blow that the world economy has not received since the 1930s.
In April the IMF predicted a 3% reduction in world GDP. Moreover, in countries with developing economies, the indicator will decrease on average by 1%, but in developed countries – by 6.1%. However, now the fund is forced to revise its estimates.
“Given that the crisis is still spreading, the current prospects are even worse than our already pessimistic forecasts. Without global medical solutions for many countries, the development of the situation will be even more unfavorable,” Kristalina Georgieva said during the FT Global online conference Boardroom.
Georgieva recalled that according to a previous IMF forecast, it was estimated that developing countries would need $ 2.5 trillion in financial assistance to survive the crisis, but now this bar is likely to be raised.
“It is very important to concentrate on a clear understanding of what protection measures we can offer developing countries so that the liquidity problem does not become a solvency problem,” the head of the IMF explained, adding that in total, global countries have announced fiscal support measures for $ 8 since the crisis began , 7 trillion.
At the same time, the IMF calls on governments to make new spending: “Please spend as much as you can, and then a little more.”
Georgieva added that the March trend with a record capital outflow in April “made a reversal”. According to the head of the IMF, a role was played by injections of liquidity from the largest central banks, including the US Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan.
The Institute of International Finance data shows that in March large developing countries faced cross-border outflows of more than $ 100 billion from their equity and bond markets. However, in April the situation changed, despite the fact that the issue of foreign bonds by developing countries is at a record level, as governments are actively attracting additional funding to combat the pandemic.
Contact us: [email protected]