Global economy 'less dire' than expected

Global economy 'less dire' than expected”

"The picture today is less dire", IMF Managing Director Kristalina Georgieva said Tuesday at the London School of Economics.

"The economy is projected to shrink by 5.8 percent in 2020, followed by a partial recovery to 2.8 percent in 2021", the International Monetary Fund said in its annual report on Latin America's largest economy, in a big contrast with the 9.1-percent contraction forecast it made in June.

The worldwide body said in June the global economy would shrink by 4.9 percent this year.

The International Monetary Fund recently urged member governments to seize a low interest rate opportunity to invest in infrastructure to drive recovery from the pandemic and a shift toward greener energy.Its research shows public investment in infrastructure and addressing climate change can pay back more than two to one in economic growth within two years.

This provided some positive spillovers for emerging markets, but Georgieva urged countries to maintain support for their economies, warning that global growth would stay subdued for the medium term and the risk of "severe economic scarring" was high.

"The IMF will continue its fundraising efforts and will provide further debt service relief for a period up to 24 months depending on resource availability", he said.

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"All countries are now facing what I would call "The Long Ascent" - a hard climb that will be long, uneven, and uncertain", Georgieva warned.

She added that the path ahead is clouded with extraordinary uncertainty, whereas faster progress on health measures, such as vaccines and therapies, could speed up the "ascent".

"We are ready to do more, as we still have substantial resources from our $1trn in total lending capacity to put at the service of our members as they embark on their "ascent", she said.

The IMF has done what it can to provide support to 81 poor nations by making more than Dollars 280 billion in lending commitments, Georgieva.

But the news elsewhere is indeed bad: "In low-income countries, the shocks are so profound that we face the risk of a 'lost generation, '" she said. She said development gains could be reversed without access to more grants, concessional credit and debt relief. We also know that an accelerated digital transformation is underway, promising higher productivity and new jobs with higher wages, ' Georgieva concluded.

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