Coronavirus strangled the world economy, but soon he loosened his grip, and business activity will recover quickly. Without consequences will not do: the crisis is the worst since the great depression almost a century ago, and the bill for treatment will exceed 9 trillion dollars, estimated recently the international monetary Fund. A month later he admitted that he was wrong.
it was much more serious.
the IMF Economists have fallen into depression a few weeks after the West began gradually to be removed to the quarantine. In mid-April they have lost faith in the near future and predicted the world economy decline by 3% this year, whereas last autumn is expected that it will grow by the same three percent.
for the First time in modern history, the forecast has changed so dramatically in such a short time. But the IMF has maintained optimism and faith in the best: he predicted a rebound by nearly 6% in the next year, but warned that first, it does not compensate for the fall and secondly, happens only if the virus does not come back the second wave, and the quarantine will not have to re-enter.
In less than a month, it became clear that the predictions become obsolete faster than they can design and present to the public.
“it is Very likely that in June we update the forecasts. And it is already clear that we can expect bad news,” said Georgieva at the Financial Times conference on Tuesday.
For a few days after the publication of the previous damage assessment from the IMF, we learned that the three largest economies in the world, accounting for more than half of the world’s production and consumption, has experienced the most serious decline in modern history.
Economic activity in China fell for the first time in nearly half a century. The European Union has not seen such a decline for all its existence. The largest of the US economy having tripped, and the longest in its history the ten-year recovery phase came to an end.
the Unemployment rate among Americans broke all records since the great depression between the two world wars of the last century.
Coronavirus interrupted the global economic recovery after the previous crisis — the recession of 2008-2009. Its scope now economists seem ridiculous compared to what shines the planet after the Great quarantine, as has already called the current depression.
Then the world got off mainly by monetary policy easing printed money and eased the financial crisis. This time it’s more serious, because the problem is not lack of capital, and the virus and its related costs and limitations.
To restart the economy after the quarantine, all countries have already promised to allocate from the Treasury an additional 9 trillion dollars, has led Georgieva fresh IMF estimates.
“And we ask only one thing: ��please waste as much as possible. And then some more”, she said.
that kind of money no one has, they have to take. To pay the bills will future generations: hard work, through higher taxes or inflation.
And if the developed countries without difficulty find creditors, then all the other COVID-19 put in an awkward position. In the grim years of funneling money from emerging markets, and this is one such time. The outflow of capital leads to a devaluation, which increases the cost not only new but also the old debt, increasing the burden on the already leaky Treasury.
as a result of relatively poor developing countries like Russia, India or Mexico will suffer from coronaries even more secured, warned the UN and called to build for the anti-crisis package of 2.5 trillion dollars.
it’s not enough to upset the non-existent donors IMF Georgieva. She said Tuesday that this estimate will also be revised in a big way.
But not so bad.
In March, when the virus first showed its deadly power, the outflow of capital from emerging markets reached nearly 100 billion dollars, which is about four times more than in each of the three previous financial crises.
Georgieva said that the April statistics paints the opposite picture: due to injections of liquidity by Central banks of US, Eurozone, UK and Japan, investors have once again awakened the appetite for risk, and capital began to return to emerging markets.
But it’s all temporary relief. The future depends on the outcome of the battle with the virus. If he comes back with a new force, the damage will be much more serious, and forecasts will again have to be revised.
And the IMF has reason to fear such developments.
While Georgieva spoke at the virtual conference, economists her organization has published an assessment of the first steps towards Europe besaratinia future.
They warned that the Old world is worse prepared for the lifting of restrictions than Asia, the first to take the impact of the pandemic.
“And Asia, and Europe, the quarantine is causing serious economic and psychological damage. Desire as quickly as possible to remove it more than understandable. However, we must act cautiously and not succumb to the temptation to open only more and faster. It is fraught with relapse of the disease.”
