Amidst fear of a second wave of the COVID 19 pandemic, the International Monetary Fund, IMF has urged governments to keep their support programs in place while disclosing that global economy is ‘not out of the woods yet’.
IMF’s Managing Director Kristalina Georgieva made this known earlier today in a message to G20 Finance Ministers ahead of their weekend meeting in Saudi Arabia.
“Activity has started to gradually strengthen. But we are not out of the woods yet. Only tepid recovery is expected for next year” she said.
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Recall that the Washington-based crisis lender late last month downgraded its growth forecasts, and now expects global GDP to fall by 4.9 percent this year due to the deeper contraction during lockdowns than previously anticipated.
Speaking further, Georgieva said the $11 trillion in stimulus provided by the G20 nations to help prevent a worse outcome, should still be maintained as it is still needed and, in some cases, should be expanded.
She highlighted measures including paid sick leave for low-income families and access to health care and unemployment insurance.
But the recovery faces risks, she said, including the possibility of “a second major global wave of the disease could lead to further disruptions.”
While she acknowledged that the “substantial and rising debt levels are a serious concern,” Georgieva said, “At this stage in the crisis, however, the costs of premature withdrawal are greater than continued support where it is needed.”
‘Many countries have moved to reopen, so, clearly, we have entered a new phase of the crisis, it will require further policy agility and action to secure a durable and shared recovery. Many jobs that have been lost amid the pandemic may never come back, so workers will need support and training to move into new sectors. The bottom line is that the pandemic is likely to increase poverty and inequality’ she said in the blog post.
