IMF chief warns the global economy is already stuck in a coronavirus-fueled recession - and says only a coordinated worldwide effort will save it
- The global economy is facing threats never seen before that necessitate cross-border cooperation, International Monetary Fund chief Kristalina Georgieva told CNBC on Friday.
- The world "is now in recession," she said, adding that the downturn's length and depth depend on "containing the virus and having an effective, coordinated response to the crisis."
- Countries should use everything in their policy arsenal to combat the outbreak, the managing director said, as "small measures" can't solve "a gigantic crisis."
- The IMF has indicated it "stands ready" to employ its $1 trillion lending pool for cash-strapped nations. Particular focus will be given to developing countries, it said last week.
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The global economy is stuck in an unprecedented kind of recession that necessitates international cooperation, International Monetary Fund chief Kristalina Georgieva told CNBC on Friday.
The managing director praised nations that have already instituted strict containment measures and banned international travel. Virus cases continue to soar around the world, with the US becoming the nation with the most infections on Thursday.
Despite calls for recession arriving in the second quarter, Georgieva said the world economy is already mired in deep contraction, and that working across borders is the only way to lift the pandemic's downward pressure.
"We have stated that the world is now in recession and that the length and depth of this recession depend on two things: Containing the virus and having an effective, coordinated response to the crisis," she said. "I see a much clearer understanding that if we don't beat it everywhere we won't be able to get out of it."
The IMF has already joined several central banks and governments in issuing swift aid to counteract coronavirus's economic fallout. The international organization said last week it "stands ready" to use its $1 trillion credit capacity to aid countries strapped for cash amid the outbreak. Relief for emerging countries is of particular importance, the IMF said in a statement.
The economic slowdown taking place around the world warrants the most potent policy response, Georgieva said Friday. Governments should avoid "small measures now when we know that it is a gigantic crisis," she told CNBC. Keeping people safe and financially sound is the top priority, and economic recovery can arrive once the virus threat subsides, she added.
"We've never seen the world economy standing still. Now we do," she said. "How we go about revitalizing it is another important topic."
Georgieva's comments arrive as the House of Representatives is poised to pass a $2 trillion stimulus package to combat the coronavirus's economic effects. The legislation would issue payments to millions of Americans and unlock hundreds of billions of dollars in loans to keep the economy stable at its already weakened level. The Senate passed the bill late Wednesday evening, and passage in the House would tee President Trump up to sign it into law.
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