Washington The coronavirus crisis will unleash the worst recession the world has seen since the 1930s Great Depression, the head of the International Monetary Fund, Kristalina Georgieva, has warned.
The Great Depression was the worst worldwide economic downturn that lasted for 10 years from 1929, beginning in the US when the New York Stock Exchange on Wall Street crashed and wiped out millions of investors.
She said: "Just three months ago, we expected positive per capita income growth in over 160 of our member countries in 2020.Today, that number has been turned on its head: we now project that over 170 countries will experience negative per capita income growth this year."
Projecting a terrifying picture of the social and economic impact of the coronavirus, she warned governments across the world had already undertaken fiscal stimulus measures of $8 trillion, but more would likely be needed.
She said the COVID-19 crisis would hit emerging markets and developing countries hardest of all, which would then require hundreds of billions of dollars in foreign aid. Speaking ahead of next week's IMF and World Bank Spring Meetings, she said the IMF expected a partial recovery in 2021 if the pandemic faded in the second half of the year but warned the situation could also get worse if the invisible killer disease continues to spread.
The virus is causing a tragic loss of life, and the lockdown needed to fight it has affected billions of people. What was normal just a few weeks ago — going to school, going to work, being with family and friends — is now a huge risk, she said. However, the encouraging news is that all governments have sprung into action and, indeed, there has been significant coordination.
But with fewer resources to begin with, emerging markets and low-income nations — across Africa, Latin America, and much of Asia -- are dangerously exposed to the ongoing demand and supply shocks, drastic tightening in financial conditions, and some may face an unsustainable debt burden, she said.
Also, with fragile health systems to begin with, many face the dreadful challenge of fighting the virus in densely populated cities and poverty-stricken slums, where social distancing is hardly an option.