The COVID-19 pandemic would cause a global recession in 2020 that could be worse than the one triggered by the 2008-2009 global financial crisis, but world economic output should recover in 2021, the IMF said on Monday.
IMF managing director Kristalina Georgieva welcomed extraordinary fiscal actions already taken by many countries to boost health systems, and protect affected companies and workers, and steps taken by central banks to ease monetary policy.
“Even more will be needed, especially on the fiscal front,” she said.
Georgieva issued the new outlook after a conference call of G20 finance ministers and central bankers, who she said agreed on the need for solidarity across the globe.
“The human costs of the coronavirus pandemic are already immeasurable, and all countries need to work together to protect people and limit the economic damage,” Georgieva said.
More countries are imposing lockdown measures to contain the rapidly spreading coronavirus.
The outlook for global growth is negative and the IMF expects “a recession at least as bad as during the global financial crisis, or worse,” Georgieva said.
Earlier this month, Georgieva had warned that 2020 world growth would be below last year’s 2.9 percent rate, but stopped short of predicting a recession.
Georgieva on Monday said that a recovery is expected in 2021, but to reach it, countries would need to prioritize containment and strengthen health systems.
“The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be,” she said.
The IMF plans to step up emergency finance, Georgieva said, adding that 80 countries have already requested help and that the IMF stands ready to deploy all of its US$1 trillion lending capacity.
Advanced economies are generally in better shape to deal with the crisis, but many emerging markets and low-income countries face significant challenges, including outward capital flows, Georgieva said, adding that investors have already removed US$83 billion from emerging markets since the start of the crisis, the largest capital outflow ever recorded.
The IMF is particularly concerned about low-income countries in debt distress and is working closely with them to address those concerns, she added.
The IMF called again on members to contribute funds to replenish its Catastrophe Containment and Relief Trust, established in February 2015, to help the poorest countries.
The IMF is exploring other options with its members, Georgieva said.
Several low and middle-income countries have asked for an allocation from the Special Drawing Right, an international reserve asset created by the IMF in 1969 to supplement its member countries’ official reserves, as was done during the global financial crisis, she said.
IMF members also need to provide additional swap lines with emerging market countries to address a global liquidity crunch, she said, adding that the IMF is exploring a proposal that would facilitate a broader network of swap lines, including through an IMF-swap-type facility.
STEADY: Prices are to rebound following inventory rebuilding demand, TrendForce said, with Samsung Electronics Co further trimming capacity as it slashes DDR4 lines The contract prices of DRAM chips are to rise by as much as 18 percent sequentially this quarter — the first price upticks in about eight quarters — driven mainly by inventory rebuilding demand for DRAM chips used in mobile devices and PCs, TrendForce Corp (集邦科技) projected yesterday. The price rebound is led by a quarterly increase of mobile DRAM chips, which are to climb between 13 percent and 18 percent quarter-on-quarter this quarter, which has not been seen since the fourth quarter of 2021, the Taipei-based market researcher predicted. Likewise, the price of mainstream PC DDR4 DRAM is expected to bounce
CHINA NOT A FRIEND: ‘Newsflash: Democracy is good for your businesses,’ US Secretary of Commerce Gina Raimondo said as she gave a speech at a national defense forum US Secretary of Commerce Gina Raimondo on Saturday urged lawmakers, Silicon Valley and US allies to stop China from getting semiconductors and cutting-edge technologies key to national security. Speaking at an annual national defense forum in Simi Valley, California, Raimondo called Beijing “the biggest threat we’ve ever had” and stressed that “China is not our friend.” The world’s top two economies are locked in a fierce commercial and geopolitical rivalry, in which her department plays a leading role. In October, Raimondo unveiled a series of restrictions on the export of advanced chips to China, including those used in the development of artificial intelligence
A Hong Kong court postponed a court hearing on troubled Chinese property developer Evergrande Group’s (恆大集團) winding-up petition scheduled for yesterday until Jan. 29. Evergrande is trying to win support from its creditors for a plan to restructure more than US$300 billion in debt to stave off liquidation. The company’s lawyer told the court it was requesting an adjournment to “refine” its new debt restructuring plan. The Hong Kong High Court has postponed the hearing over Evergrande’s potential liquidation several times. Judge Linda Chan (陳靜芬) had said in October that yesterday’s hearing would be the last before a decision is handed down. Chan
SOLID FOUNDATION: Given its decades of expertise in megatronics, manufacturing and robotics, Japan has the wherewithal to create its own AI, Jensen Huang said Nvidia Corp plans to help build an artificial intelligence (AI) tech-related ecosystem in Japan to meet demand in a country eager to gain an edge in this emerging technology. The US company will seek to partner with Japanese research organizations, companies and start-ups to build factories for AI, Nvidia CEO Jensen Huang (黃仁勳) said yesterday during opening remarks in a meeting with Japanese Minister of Economy, Trade and Industry Yasutoshi Nishimura. The company is to set up an AI research laboratory, and invest in local start-ups and educate the public on using AI, Huang said. Huang earlier this week met with Japanese Prime