Global growth to ‘dip below’ last year’s rate on coronavirus: IMF

Washington: The new coronavirus epidemic poses a "serious threat" and will slow growth in the world economy to below the 2.9 percent posted last year, IMF chief Kristalina Georgieva said on Wednesday.

The COVID-19 outbreak "is no longer regional issue, it is a global problem (that) calls for global response," Georgieva told reporters. The epidemic´s impact on confidence and steps to contain it are impacting economic activity, with the result that "global growth in 2020 will dip below last year´s levels," she said.

The IMF in January forecast growth this year of 3.3 percent, which means at least a half point will be lost to the virus. But "how far it will fall and how long the impact will be is still difficult to predict," she said.

Georgieva said the fund´s analysis had assumed the virus would be largely confined to China, which would have led to a sharp but short economic slowdown, followed by a quick recovery. "Unfortunately over past week we´ve seen a shift to a more adverse scenario for the global economy," due to the "sheer geographic spread of the epidemic around the world," impacting a third of the IMF´s 189 member countries.

Georgieva and World Bank President David Malpass spoke to reporters after a conference call of finance officials from the member nations, who directed the IMF "to use all its available financing instruments to help member countries in need."

"We are determined to provide the necessary support to mitigate the impact, especially on the most vulnerable people and countries," the statement from the governing body, the IMFC, said.

Georgieva said the Washington-based development lender has $1 trillion in overall financing capacity, including $50 billion available without a formal IMF program, and $10 billion in no-interest funds for the poorest countries.

The World Bank on Tuesday announced it had $12 billion available to help countries respond to the coronavirus threat.

Malpass told reporters "the speed and breadth of the response is crucial to its effectiveness." Malpass told reporters on Tuesday the goal is to provide fast, effective action that responds to country needs.

He said it is critical to "recognize the extra burden on poor countries" least equipped in the struggle to prevent the spread of the COVID-19 virus.

The funds, some of which are targeted to the world´s poorest nations, can be used for medical equipment or health services and will include expertise and policy advice, the bank said in a statement.

Malpass said there were still “many unknowns” about the fast-spreading virus and “much more” aid might be required, but he declined to elaborate.

Malpass said the money -- $8 billion of which is new -- will go to countries that request help. The bank has been in contact with many member nations, but he did not specify which are likely to be the first to receive aid.

"The point is to move fast. Speed is needed to save lives," he said in a conference call. "We want to make the best use of the World Bank´s extensive resources and global expertise and the historical knowledge of crises," he said, citing similar crisis funding to combat the Ebola and Zika outbreaks in recent years.

Malpass called on countries to coordinate their actions on a regional and international level, saying the speed and breadth of the response would be critical to saving lives. “We’re announcing today an initial package of immediate support that will make available up to $12 billion to respond to country requests for crisis financing of their immediate needs and also to lessen the tragic impacts of the crisis,” he said.