Now is the not the time for governments to pull back on supporting their economies the head of the International Monetary Fund said Wednesday (October 14) in Washington, DC.
“The picture over the last couple of months has become less dire. Yet we continue to project the worst global recession since the Great Depression,” said IMF Managing Director Kristalina Georgieva in her news conference opening the Annual Meetings of the IMF and World Bank.
“Growth is expected to fall to minus four point four percent this year, and over the next five years, the crisis could cost an estimated twenty eight trillion in output losses,” said the Bulgarian economist.
Despite rising debt, now is not the time to withdraw measures supporting the global economy, she said.
“A durable economic recovery is only possible if we beat the pandemic and we beat it everywhere. Stepping up vital health measures is our imperative as ease fiscal and monetary support to households and firms. These lifelines, such as credit guarantees, wage subsidies, they’re likely to remain critical for some time to ensure economic and financial stability,” she said taking questions from media virtually.
“Pull the plug too early and then we can see serious selfishly inflicted harm. Avoid, avoid doing that,” she emphasized after meeting with G20 Finance Ministers and central bankers before walking in.
The ultimate shape of the recovery is still highly uncertain, and will be determined by how the world tackles the health crisis, said Georgieva.
“In the short run, given the high level of uncertainty, I worry most about withdrawing support to workers and firms prematurely because it could cause a wave of bankruptcies and massive increase in unemployment. We are advising all governments do as much as you can. Don’t cut financial lifelines too early. When we look down the road, I worry about the scarring. This crisis can cause an increase in inequality.”
But by meetings such as the G20 countries can work together to coordinate a response to the crisis, Georgieva urged.
“A crisis like no other calls for recovery like no other. We must dare to face our most daunting challenge. Together, we must dare to take the right actions now.”
For full coverage of the IMF and World Bank Annual Meetings: www.imfconnect.org