The COVID-19 outbreak could damage global economic growth this year, IMF managing director Kristalina Georgieva said on Sunday, but added that a sharp and rapid economic rebound could follow.
“There may be a cut that we are still hoping would be in the 0.1-0.2 percentage space,” Georgieva told the Global Women’s Forum in Dubai.
She said the full impact of the spreading disease that has killed more than 1,770 people would depend on how quickly it was contained.
Photo: AFP
“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 update last month to the World Economic Outlook, the IMF lowered global economic growth forecast for this year by 0.1 percentage points to 3.3 percent, following a 2.9 percent growth the previous year, the lowest in a decade.
Georgieva said it was “too early” to assess the full impact of the outbreak, but acknowledged that it had already affected sectors such as tourism and transportation.
“It is too early to say, because we don’t yet quite know what is the nature of this virus. 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 with the effects of the SARS outbreak in 2002 and 2003, she said China’s economy at the time made up just 8 percent of global economy. Now, that figure is 19 percent.
She welcomed the trade agreement signed last month by the US and China, the world’s first and second-largest economies.
“About China, it has been slowing down naturally, transiting from what we can call high-speed to high-quality growth,” she said. “And as a result of the reduction of trade tensions [after the agreement] ... we actually have been predicting some improvement for 2020 in the projections for China.”
Regarding the outbreak, “they’re working very hard to contain the epidemic, they have brought US$115 billion equivalent liquidity so they can perk up the economy,” she said.
However, the world should be concerned “about sluggish growth” affected by uncertainty, Georgieva said.
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