Coronavirus: 2021 economic recovery unlikely - IMF

Coronavirus: 2021 economic recovery unlikely - IMF
Photo credit: Getty

The global economy will take much longer to recover fully from the shock caused by the new coronavirus than initially expected, the head of the International Monetary Fund says.

IMF managing director Kristalina Georgieva says the Fund is likely to revise downward its forecast for a 3 percent contraction in GDP in 2020, with only a partial recovery expected next year instead of the 5.8 percent rebound initially expected.

In an interview with Reuters, she said data from around the world was worse than expected.

"Obviously that means it will take us much longer to have a full recovery from this crisis," she said. She gave no specific target date for the rebound.

In April, the global lender forecast that business closures and lockdowns to slow the spread of the virus would throw the world into the deepest recession since the Great Depression of the 1930s.

But data reported since then points to more bad news, Georgieva said earlier this month.

The IMF is due to release new global projections in June.

Asked about renewed tensions between the US and China - the world's two largest economies - Georgieva said she was urging member countries to maintain open communication and trade flows that had underpinned global growth for decades.

"We do need to keep trade flows open, especially for medical supplies, food, and longer-term to find a pathway to overcome what is happening now with this crisis," Georgieva said.

"We want to continue to build this more prosperous future for all by overcoming the scarring that may come from this crisis."

Georgieva warned against retreating into protectionism as a result of the crisis.

"We should not turn away from what has worked for people everywhere: a division of labour and collaboration and trade, which allows the costs of goods and services to go down, allows incomes to go up, and allows poverty within countries and across countries to retreat," she said.

The IMF has provided emergency financing to 56 countries since the crisis began and will decide on 47 additional requests as quickly as possible, Georgieva said.