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IMF: Pandemic to cause global recession

"The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be," said International Monetary Fund Managing Director Kristalina Georgieva.

A woman wearing a face mask surrounded by almost no other foot traffic walks by the New York Stock Exchange before the opening bell on Wall Street in New York City on Monday, March 16. Photo by John Angelillo/UPI
A woman wearing a face mask surrounded by almost no other foot traffic walks by the New York Stock Exchange before the opening bell on Wall Street in New York City on Monday, March 16. Photo by John Angelillo/UPI | License Photo

March 24 (UPI) -- The International Monetary Fund said it expects the coronavirus pandemic to cause a global recession this year on par with or worse than the one experienced during the global financial crisis.

Kristalina Georgieva, IMF managing director, said Monday in a statement following a Group of 20 ministerial phone call on the coronavirus emergency that the outlook for 2020 was negative and there would be "a recession at least as bad as during the global financial crisis or worse."

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On the positive, she said they expect a recovery in 2021 if countries prioritize containing COVID-19 and strengthening health systems worldwide.

"The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be," she said.

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Some 80 countries have requested assistance from the IMF, she said, and investors have already removed a record capital outflow of $83 billion from emerging markets since the beginning of the crisis.

She reiterated the IMF's concern for low-income countries in debt distress that will be handcuffed compared to advanced economies to respond to their epidemics.

Moves by major central banks to ease monetary policy have been welcomed by the IMF, she said, but "even more will be needed, especially on the fiscal front."

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In order to help, she said the IMF is on standby to deploy its $1 trillion lending capacity while it was working to replenish the Catastrophe Containment and Relief Trust to help the poorest nations.

"Let us stand together through this emergency to support all people across the world," she said.

The warning came as the Federal Reserve announced in a statement it was deploying sweeping support for the U.S. economy during the pandemic that allows for the unlimited buying of Treasury bonds and mortgage-backed securities.

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