The world economy will lose $12 trillion this year and next year due to the pandemic, said the Managing Director  of the International Monetary Fund (IMF), adding that the majority of emerging markets and developing countries are not seeing a reversal of fortunes yet.

Kristalina Georgieva  was speaking at the Event of the Finance Ministers on Financing for Development in the Era of COVID-19 and Beyond in Washington, DC, USA.

“The outlook for a number of advanced economies is somewhat less bad than we anticipated. China has turned the corner and is recovering a little faster than anticipated,” she said.

“A massive policy response put a floor under the world economy. This included $11 trillion of fiscal measures. And central banks have done miracles to inject huge amounts of liquidity and support their national economies and – through spillovers – the economies of other countries. We have seen it has become easier for emerging market countries with good fundamentals to raise money.

“The IMF has been part of this very strong response. Never in our history have we done so much so quickly, supporting over 80 countries through emergency financing and also through our regular lending programs. We have now extended support of $270 billion – out of the Fund’s $1 trillion capacity – and more than a third of this support has been provided in recent months,” Georgieva explained.

“The world has learned to function while the pandemic is still around us. We wear masks, we socially distance and we follow protocols. And that has allowed some rebounds. We are seeing that non-contact-dependent activities like manufacturing are doing somewhat better than expected,” she said.”And we are very hopeful to have a vaccine. So, this is on the more optimistic side.”

Small countries with tourism-dependent economies are on their knees, she noted, highlighting that countries with high debt levels are in terrible trouble, and the virus is now moving to places where health systems are weaker.

“We need to recognize that this crisis is telling us to build resilience for the future,” she said.”That means investing in education, digital capacity and human capital – the health systems and the social protection systems. We need to make sure the other crises in front of us – like the climate crisis – are well integrated and addressed. And we need to prevent inequality and poverty – including gender inequality – from raising their ugly heads again.”

“To do this, we have to take care of taxation in a way that transforms and builds resilience for the future. Yes, it is going to be hard. Everybody on the political side knows how hard this will be. But after the global financial crisis, we built resilience in the banking sector by reforming it,” the IMF Managing Director concluded. – TradeArabia News Service