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MNI POLICY: IMF Cuts Growth Forecast Amid Coronavirus Fears

By Ryan Hauser
     WASHINGTON (MNI) - The IMF on Wednesday warned it will cut its forthcoming
global growth forecast as the economic outlook moves toward a "more dire
scenario" as the coronavirus spreads.
     Growth this year would "fall below the level of last year," which was 2.9%,
IMF managing director Kristalina Georgieva said at a press conference in
Washington. Georgieva stressed the uncertainty surrounding the virus, both
economically and medically and said it "requires a high degree of coordination"
among governments. 
     "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.
World Bank Group president David Malpass, who appeared alongside her, also urged
     The current financial system is sound and more resilient than it was before
the 2008 financial crisis, but we are "wrestling with uncertainty," she said. 
     She attributed two-thirds of the virus-related disruption to the indirect
effects of uncertainty and only one-third to direct costs from the loss of life,
closures, and quarantines. The global economy faces a "generalized weakening of
demand" that includes tighter financial conditions that in turn call for
adequate supply of credit and liquidity, she added.
     The IMF is particularly concerned about the most vulnerable, low-income
member countries and pledged to make use of three tools to bolster countries in
emergency, including $1 trillion in lending capacity, "rapidly disbursing
emergency financing" of up to $50 billion, and $200 million in the Catastrophe
Containment and Relief Trust.
     "We have the tools to help" and "we are coordinating," she said.
     The World Bank also announced a $12 billion package yesterday to provide
critical short-term financing, Malpass said, noting a "clear need" to offer
financing assistance to small and medium size businesses.
--MNI Washington Bureau; +1 202 371 2121; email:
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