Coronavirus is a ‘human tragedy’ that poses sharp risks to global economic recovery, IMF says
- China’s outlook in the near term will largely depend on a successful containment of the virus, says the ‘G20 Surveillance Note’ from the International Monetary Fund
- And while global growth appears to be bottoming out, the projected recovery – an increase from 2.9 per cent in 2019 to 3.3 per cent – is seen as fragile and shallow
Further spread of the coronavirus could pose sharp downside risks and derail the recovery of global growth, according to a new report by the International Monetary Fund.
China’s outlook in the near term will largely depend on a successful containment of the coronavirus, with the current scenario, which is broadly in line with similar experiences in the past such as the severe acute respiratory syndrome (Sars) outbreak in 2002–03, suggesting the disruption of economic activity will be followed by a period of stronger catch-up growth from pent-up demand, according to Johannes Eugster, economist in the multilateral surveillance division of the International Monetary Fund’s (IMF) research department.
But if the impact turns out to be larger and longer lasting, it could pose risks to global growth, Eugster said in a “G20 Surveillance Note” ahead of the G20 Finance Ministers and Central Bank Governors’ meetings to be held over the weekend in Riyadh, Saudi Arabia.
A wider and more protracted outbreak or lingering uncertainty about contagion could intensify supply chain disruptions and depress confidence more persistently, making the global impact more severe
Spillovers to other countries are likely through tourism, supply chains, and commodity price effects, while challenges is likely to persist related to a structural decline in demand for cars and mobile phones, making these sectors unlikely sources of strong growth going forward, Eugster added.