IMF chief Kristalina Georgieva has warned governments not to withdraw aid they have provided prematurely
Washington:
Amid a flood of government spending, the global slowdown triggered by the coronavirus pandemic will not be as severe as originally feared, IMF chief Kristalina Georgieva said on Tuesday, but she warned that the crisis was far from over.
“The situation today is less dire … allowing a small upward revision of our global forecast for 2020,” she said in a speech ahead of the fall IMF-World Bank meetings next week, when the IMF is due to present its updated forecasts. .
In June, the Washington-based crisis lender forecast a contraction of nearly 5% in global GDP, but the results for the second and third quarters were better than expected.
Georgieva credited the “extraordinary policy measures that put a floor under the global economy,” which amounted to $ 12 trillion in tax support to households and businesses.
But she warned governments not to withdraw their aid prematurely, as the outlook for next year is mixed and fraught with uncertainty and risk.
After more than a million deaths, “this calamity is far from over. All countries are now facing what I would call ‘the long ascent’ – a difficult ascent which will be long, uneven and uncertain,” he said. Georgieva said.
In the United States and Europe, the recession, while painful, has not been as severe as economists initially feared, and China is experiencing “a faster-than-expected recovery.”
But the news elsewhere is bad: “In low-income countries the shocks are so deep that we run the risk of a ‘lost generation’,” she said.
“There is also now the risk of serious economic damage from job losses, bankruptcies and disruption of education.”
Low-income countries have not had the resources to spend as much to support jobs and businesses, and they will also need help dealing with their debt, including through more subsidies and restructuring of the economy. the debt.
She compared the crisis to World War II, when leaders “forged a better world at the worst possible time”, and called on governments to continue supporting workers for as long as needed, while spending to create an economic system. better and fairer. .
“Where the pandemic persists, it is essential to maintain lifelines throughout the economy, to businesses and workers,” she said. “Cut the lifelines too soon, and the long climb becomes a steep drop.”
But, said Georgieva, “We cannot simply afford to rebuild the old economy, with its low growth, low productivity, high inequalities and the worsening climate crisis,” and she called for more. spending on green jobs that can generate more jobs.
“This will require both stimuli for job creation, especially in green investments, and cushioning the impact on workers,” she said. “Safeguarding social spending will be essential for a just transition to new jobs.”
She referred to an IMF report released on Monday showing that a spending increase of just 1% of GDP could create 33 million new jobs.
(Except for the title, this story was not edited by GalacticGaming staff and is posted from a syndicated feed.)
