IMF slashes key growth forecast and warns against 'a more adverse scenario for the global economy' as coronavirus spreads
- International lenders warned Wednesday that global growth would fall this year as the coronavirus spread.
- They urged governments to spend what was necessary to address the human and economic effects of the outbreak.
- The IMF revised its 2020 forecast for global growth to below the 2.9% rate seen in 2019, a break with previous expectations for GDP to expand at a faster rate than last year.
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International lenders warned Wednesday that global growth would fall this year as the coronavirus spread, and urged governments to spend what was necessary to address the human and economic effects of the outbreak.
"We, unfortunately, over the last week have seen a shift to a more adverse scenario for the global economy," International Monetary Fund Managing Director Kristalina Georgieva said of the respiratory illness COVID-19.
The IMF revised its forecast for global growth to below the 2.9% rate seen in 2019, a break with previous expectations for gross domestic product to expand at a faster rate than last year.
Georgieva said the institution should provide "all available financing instruments" to nations in need. While the global economy was on better footing than during the 2008 financial crisis, she added, it would be better for governments to act preemptively through response measures than to not do enough.
"I cannot emphasize enough how urgent it is for authorities to lean forward in funding outbreak-related health spending and the need to match demand with supply of the necessary protective and treatment health products," she said, also noting that any other shocks could be addressed through well-targeted measures. "This is a no regrets policy."
Alongside Georgieva, World Bank President David Malpass said timeliness and coordination would be key in the global response to coronavirus. On Tuesday, the bank announced it would offer $12 billion in immediate funds to help member nations address the human and economic impacts of the outbreak.
"Speed is needed to save lives at this point," Malpass said, adding that the World Bank would roll out more virus-related operations this month.
"The breadth of the response is key to effectiveness," he said. "Most effective is if it's broad and brings in many countries."
The institutions noted any fiscal and monetary stimulus should not shift resources away from business capital. Governments and central banks around the globe have taken steps to stem the economic fallout from COVID-19.
On Wednesday, the Federal Reserve unexpectedly slashed interest rates by a half percentage point. It was the first emergency measure from the central bank since the financial crisis, reflecting growing concerns about the resilience of the US economy.