Coronavirus crisis is temporary, says IMF
The IMF is working to address the crisis through zero- and low-interest rate loans and grants, and is ready to help emerging markets deal with sharp capital outflows.
Washington - Long expansionary period, high employment rates, however, mean global economy should weather current shock
Published: Sat 21 Mar 2020, 9:15 PM
Last updated: Mon 23 Mar 2020, 2:12 PM
The impact of the global coronavirus pandemic will be "quite severe", but a long expansionary period and high employment rates mean the global economy should weather the current shock, a top International Monetary Fund official said.
Martin Muehleisen, who heads the IMF's strategy policy and review department, said in an IMF podcast that the main goal for governments should be to limit the spread of the virus in a way that provides confidence that the economic shock will be temporary.
He said banks and governments had already taken unprecedented measures to provide liquidity to markets and keep them functioning, "and maybe more will be needed", but such steps should be coordinated internationally to amplify their effect. "The better organised and the more coordinated the health responses to this crisis, the more quickly it may be possible that confidence returns," he said.
Leaders of the Group of Seven rich nations last week said they would do "whatever it takes" to respond to the outbreak, but provided no specifics, which left markets unsettled.
Leaders of the world's 20 major economies (G20) will hold a virtual summit next week, but divisions within the group dim hopes for strong coordinated action, experts say.
Muehleisen said financial institutions were more resilient than before the global financial crisis of 2008-09, and steady growth and high employment rates should create some buffers.
"In that sense the crisis has come at a time where hopefully we are prepared for this kind of shock," he said, although the impact would still be "quite severe".
Muehleisen said the IMF was working to address the crisis through zero- and low-interest rate loans and grants, and was ready to help emerging markets deal with sharp capital outflows.
"It's important that countries act responsibly, and that we keep room to respond if there is indeed a need for a public policy response to the degree that is happening at the moment."