The IMF is gathering data to assess the full impact of the coronavirus outbreak in China, but hopes to see a ‘Vee-shaped’ recovery, Fund Managing Director Kristalina Georgieva said Wednesday (February 12) in Washington, DC.
She began by sending a message to the people of China and all the victims of the disease.
“Let me first say that before we think about the economic impact, we have to recognize that this is a tragedy for people that are affected, those who lose their lives and their families and communities. And therefore it is right to concentrate first and foremost on restricting the epidemics and then making sure that less people suffer,” said the Bulgarian economist.
The IMF has begun to make a full assessment of the impact on the global economy but new data is still coming.
“We are still at the point of quite a lot of uncertainty. So I would talk about scenarios rather than projections,” she said.
Georgieva said that the “likely scenario” now is for a quick recovery of China’s economy as factories gear back up to make up for lost time and warehouses are re-supplied.
“In terms of scenarios, the more most likely scenario we now view is a V shaped impact. In other words, sharp decline in economic activities in China, followed by a rapid recovery and a total impact on China relatively contained. Therefore, impact on the world economy also contained,” she said.
The coronavirus has already claimed more than 1,000 victims and has spread outside of China. No immunization has yet been discovered and much remains unknown about the disease and how to treat it.
“We need to remember that there are uncertainties on the nature of this epidemic and on the way it is impacting sectors of the economies and value chains. We often make comparisons between SARS in the early 2000s and the Corona virus. We have to remember that the virus is different. China is different and the world economy is in a different place. This virus spreads differently than SARS and has already exceeded the number of people who lost their lives, in comparison to SARS,” said the IMF chief.
The SARS outbreak occurred at a time when China had a much smaller impact on the global economy, Georgieva said.
“The Chinese economy is much more significant for the world. Then it was 8 percent of the world economy. Now it is 19 percent and it is much more integrated in Asia and with the rest of the world. Therefore, disruptions are more likely to cascade down to other countries. And 3: the world economy in the early 2000s was in a very strong shape, whereas today we are projecting a relatively modest global growth… 3.3 percent. It is a sluggish recovery after a downward in the last that year. For all these reasons, we have to carefully assess what the impact is, and turn a scenario into projections,” she added.
Georgieva said she expects to have numbers to release to the G20 Ministers when they meet in Riyadh, Saudi Arabia next week.
“We expect to have more data based on the restart of factories and production in China within the next week to 10 days. Ask me again then.”