Coronavirus: World Faces Worst Economic Fallout Since 1930’s Great Depression, Says IMF

IMF Managing Director Kristalina Georgieva has warned the coronavirus pandemic will turn global economic growth “sharply negative” this year.

She said the world faced the worst economic crisis since the Great Depression of the 1930s.

The head of the International Monetary Fund forecast that 2021 would only see a partial recovery.

Lockdowns imposed by governments have forced many companies to close and lay off staff.

Earlier this week, a UN study said 81% of the world’s workforce of 3.3 billion people had had their place of work fully or partly closed because of the outbreak.

Kristalina Georgieva made her bleak assessment in remarks ahead of next week’s IMF and World Bank Spring Meetings.

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Emerging markets and developing countries would be the hardest hit, the IMF chief said, requiring hundreds of billions of dollars in foreign aid.

She said: “Just three months ago, we expected positive per capita income growth in over 160 of our member countries in 2020.

“Today, that number has been turned on its head: we now project that over 170 countries will experience negative per capita income growth this year.”

Kristalina Georgieva added: “In fact, we anticipate the worst economic fallout since the Great Depression.”

She said that if the pandemic eased in the second half of 2020, the IMF expected to see a partial recovery next year. But she cautioned that the situation could also worsen.

Kristalina Georgieva’s comments came as the US reported that the number of Americans seeking unemployment benefits had surged for the third week by 6.6 million, bringing the total over that period to more than 16 million Americans.

On April 9, following marathon talks, EU leaders agreed a €500 billion ($546 billion) economic support package for members of the bloc hit hardest by the lockdown measures.

The European Commission earlier said it aimed to co-ordinate a possible “roadmap” to move away from the restrictive measures.

Earlier this week, the International Labor Organization (ILO), a UN agency, warned that the pandemic posed “the most severe crisis” since World War Two.

The ILO said the outbreak was expected to wipe out 6.7% of working hours across the world during the second quarter of 2020 – the equivalent of 195 million full-time workers losing their jobs.

Last month, the Organization for Economic Co-operation and Development (OECD) warned that the global economy would take years to recover.

OECD secretary general Angel Gurría said that economies were suffering a bigger shock than after the 9/11 terror attacks of 2001 or the 2008 financial crisis.