The head of the International Monetary Fund says it is clear that the global economy has now entered a recession that could be as bad or worse than the 2009 downturn.
IMF Managing Director Kristalina Georgieva said the 189-member lending agency was forecasting a recovery in 2021, saying it could be a “sizable rebound”.
But she said this would only occur if countries succeed in containing the coronavirus and limiting the economic damage.
“A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and lay-offs that not only can undermine the recovery but erode the fabric of our societies,” she said at a news conference on Friday.
Georgieva spoke to reporters following a telephone conference with finance officials from the 24 countries that make up the IMF’s policy-setting panel.
She said the IMF was updating its economic outlook now and it would be released in a few weeks, allowing the agency more time to assess the economic effects of the virus.
Asked if the United States was now in recession, she noted that Federal Reserve Chairman Jerome Powell had said on Thursday that the country “may well be in a recession”.
She said she believed not only the United States but many other advanced economies and a number of developing countries had already entered downturns.
Georgieva said lower income countries were being hit hard by the spreading coronavirus, with 81 governments now seeking support from an IMF emergency financing program being used to provide aid.
She announced that Kyrgyzstan would receive the first IMF support package of $US120.9 million ($A195.0 million) to deal with adverse effects of the virus.
She repeated a pledge that the IMF stood ready to make all $US1 trillion of its lending resources available to countries being hit by the virus.
“We have seen an extraordinary spike in requests for IMF emergency financing,” Georgieva said.
“We are being asked by our members to do more, do it better and do it faster than ever before.”
Georgieva said the IMF also wanted to find ways to provide more debt relief to the poorest countries.