The deadly coronavirus epidemic could put an already fragile global economy recovery at risk, the IMF warned Sunday, as G20 financial chiefs discussed ways to contain its economic ripple effects. Global growth was poised for a modest rebound to 3.3 per cent this year, up from 2.9 per cent last year, International Monetary Fund chief Kristalina Georgieva said after a two-day meeting of G20 finance ministers and central bank governors in Riyadh.
“The projected recovery… is fragile,” Georgieva said. “The COVID-19 virus — a global health emergency — has disrupted economic activity in China and could put the recovery at risk,” she said in a statement.
Alarm has been growing 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 2,442 lives in China, cutting off transportation, disrupting trade and fanning investor alarm as businesses are forced to close their doors. Georgieva told the Riyadh gathering that the outbreak would shave about 0.1 percentage points from global growth and constrain China’s growth to 5.6 per cent this year. “I reported to the G20 that even in the case of rapid containment of the virus, growth in China and the rest of the world would be impacted,” she said.
The IMF projects a “V-shaped, rapid recovery” for the global economy, but given the uncertainty around the spread of the virus, Georgieva urged the financial leaders to “prepare for more adverse scenarios”.
At the meeting in Saudi Arabia, the first Arab nation to hold the G20 presidency, financial leaders also discussed ways to achieve consensus on a global taxation system for the digital era by the end of 2020. 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. The gathered financial leaders vowed to “enhance global risk monitoring” of the outbreak, according to the G20 final communique. “We stand ready to take further action to address these risks,” it said.
Paris on Friday announced several measures to assist French companies affected by the fallout from the epidemic.
“We are ready to take any additional measures if necessary to cope with a possible worsening of the impact on the global economy,” said French Finance Minister Bruno Le Maire, who attended the G20 talks.
“The risk is now confirmed, and so is the impact on the global economy, and it is a real concern for all G20 members.” Georgieva warned the global economy faced other risks including rising debt levels in some countries as well as climate change, but in particular urged G20 nations to cooperate to contain the spread of the virus.
“COVID-19 is a stark reminder of our interconnections and the need to work together,” Georgieva said. “In this regard, the G20 is an important forum to help put the global economy on a more sound footing.”