It is premature to gauge the economic impact of the coronavirus outbreak on China’s economy, but it will certainly impact the first quarter, International Monetary Fund chief Kristalina Georgieva said Thursday.
Speaking at the Center for Global Development she said that if the current emergency follows the experience of the SARS epidemic in 2002-2003, it could slow growth in the short term, but then the economy should right itself.
“It would be irresponsible to offer any speculations around what may happen. What I can do is refer to a similar case of SARS, the SARS epidemics. What happened then was indeed a slow-down in the short term and then rebalancing of economic growth,” said the Bulgarian economist.
“But the broader point I want to make is that preparedness, prevention, early action–this has to get in the bloodstream of policymakers.”
She cited “dramatic” efforts to halt the spread of the disease which has sickened tens of thousands and killed more than 200 people so far. On the economic front the first impacts would be on travel and global supply chains.
“The immediate impact is obvious. We have travel, tourism, manufacturing in China and a little bit beyond China may initially be impacted. China has taken very dramatic actions to restrict the spread of the virus and work is underway on a vaccine. So let’s say for this quarter there will very likely be a negative impact. What would happen beyond this quarter we must observe and assess,” she told the audience of 200.
The IMF on January 20 projected the global economy would grow by 3.3 percent in 2020, above the 2.9 percent level last year, due in part to an easing in US-China trade tensions. She noted that growth specifically in China was maturing from high-speed to high-quality but that the IMF would be watching how the coronavirus outbreak evolves.
Georgieva reflected on her first four months at the helm of the IMF, and that countries and the Fund must be ready for shocks from unpredictable risks.
“I recognize that the world has changed and there are macro critical issues today that at the time of the birth of the IMF 75 years ago were not either present or relevant. Today, they are. Climate is definitely relevant. Inequality, relevant. Fragility, relevant. Corruption, relevant. So we have to integrate them in our work. And do it hard headedly, but with a soft heart.”