BUSINESS

World is now in recession: IMF

Virus-hit developing nations need dollops of funding

The COVID-19 pandemic has driven the global economy into a downturn that will require massive funding to help developing nations, IMF chief Kristalina Georgieva said Friday.

“It is clear that we have entered a recession” that will be worse than the one in 2009, following the global financial crisis, she said.

With the worldwide economic “sudden stop,” Ms. Georgieva said the fund’s estimate “for the overall financial needs of emerging markets is $2.5 trillion.”

But she warned the estimate “is on the lower end.”

Governments in emerging markets, which have suffered an exodus of capital of more than $83 billion in recent weeks, can cover much of that, but “clearly the domestic resources are insufficient” and many already have high debt loads.

Over 80 countries, mostly with low incomes, have already requested emergency aid from the International Monetary Fund, she said.

“We do know that their own reserves and domestic resources will not be sufficient,” she said, adding the fund is aiming to beef up its response “to do more, do it better, do it faster than ever before.” She also welcomed the $2.2 trillion economic package approved by the U.S. Senate, saying “it is absolutely necessary to cushion the world’s largest economy against an abrupt drop in economic activities.”

Recommended for you