Saudi G20 gathering weighs coronavirus threat to global economy

RIYADH: The deadly coronavirus epidemic will dent global growth, the IMF warned on Saturday, as G20 finance ministers and central bank governors weighed its economic ripple effects at a two-day gathering in Riyadh.

The outbreak will shave about 0.1 percentage points from global growth and constrain China’s growth to 5.6 percent this year, IMF chief Kristalina Georgieva told luminaries from the leading 20 economies in the Saudi capital.

The gathering comes amid growing alarm over the new virus as Chinese authorities lock down millions of people to prevent its spread, with major knock-on effects economically. The virus has now claimed 2,345 lives in China, cutting off transportation, disrupting trade and fanning investor alarm as businesses are forced to close their doors.

"Global growth would be about 0.1 percentage points lower," Georgieva said. "But we are also looking at more dire scenarios where the spread of the virus continues for longer and more globally, and the growth consequences are more protracted."

At the meeting in Saudi Arabia, the first Arab nation to hold the G20 presidency, financial leaders also discussed money laundering, digital currencies and ways to achieve a global taxation system for the digital era.

But at the core of the discussions was an action plan to shield the world economy -- already facing a slowdown -- from the impact of the outbreak, said French Finance Minister Bruno Le Maire.

"The question remains open: whether it will be a V-shape with a quick recovery of the world economy or whether it would lead to a L-shape with a persistent slowdown in world growth," Le Maire told reporters. "This is the key question."

A senior US treasury official said Washington was "closely watching" the developments relating to the virus and assessing its effects. China has said it will not be sending any leaders from Beijing for the Riyadh gathering, chaired by the kingdom’s finance minister Mohammed al-Jadaan and central bank governor Ahmed al-Kholifey.

But it said the Chinese ambassador in the kingdom will instead lead a small delegation.

The G20 organisers also hosted a ministerial-level symposium on international taxation on Saturday, focused on the challenges arising from the digitalisation of the global economy. "There is a consensus among the G20 members on the necessity of getting this new international taxation system for the sake of fairness and efficiency," said Le Maire.