- Coronavirus.Latest news of the epidemic
The IMF and the Eurogroup have taken on Wednesday the witness of the G-7 and the US Federal Reserve to offer a first assessment of the impact of the coronavirus on the global economy and the conclusions are not too positive. According to the International Monetary Fund, the growth of 2020 will be lower than last year due to the Covid-19 epidemic, although it is "difficult to predict" how much the economy is going to fall, according to the agency's managing director, Kristalina Georgieva. In 2019, global growth was 2.9% and for this year, the Fund projected an expansion of 3.3% that now calls into question.
Against this background, the economies of the euro zone have wanted to offer an image of unanimity and support to the most disadvantaged countries and have shown their willingness to act, even with "fiscal measures", as confirmed by the president of the Eurogroup, Mário Centeno.
The agency has held a meeting electronically to address the situation in the member countries and coordinate a response to possible economic consequences in them. The commitment is total, to the point that they have assessed the possibility of allowing temporary deviations in the Stability and Growth Pact in the face of unforeseen expenses due to the empidemia.
"Our fiscal rules grant flexibility to unusual events beyond government control," said Centeno, who appeared in Lisbon at the end of a videoconference with the finance ministers of the euro and other European Union (EU) countries that They do not share the single currency.
"The outbreak (of coronavirus) is having a negative impact on the global economy, but the duration and extent of the problem is still uncertain," said the Portuguese, who said that the situation is monitored "very closely" and "not they will save efforts to contain the disease. "
Unanimity also in the IMF
Along these same lines, the 189 member countries of the IMF have pledged to provide "all the necessary support to limit the impact" of the epidemic, especially in the most vulnerable countries, following a conference call by the institution's monetary and financial committee. . "We have asked the IMF to use all the financing instruments at its disposal to help the member countries in need," the IMF members said in a statement.
Their messages join those issued in recent days by international institutions and authorities that monitor, not without some concern, the effects of the coronavirus on the global economy.
The decision that has had the most impact in the most recent hours has been the reduction of rates by surprise from the US Federal Reserve. The body chaired by Jerome Powell reported that it reduced its reference rates by 0.5%, leaving them in the range of 1% -1.25%, and the announcement discolored markets and investors.
On the one hand, some interpreted it as a firewall to keep the possible economic effects of the epidemic under control, while others understood it as a sign that its impact assessment is greater than expected.
However, the bags showed signs of bewilderment on Tuesday, with Wall Street fitting 3% drops. However, this Wednesday the main markets around the world bounce safely at the backing of the authorities.
David Lafferty, head of strategy at Natixis IM , believes that volatility will remain in the markets and recommends investors "not waste the crisis." "High volatility is a great opportunity to rebalance portfolios, optimize tax considerations and undertake reallocation of assets"
Recession Risk
The OECD said last Monday that, in the worst case scenario, the Eurozone and Japan would enter into recession if Covid-19 continues its expansion for a growing number of countries and for a prolonged period of time.
Along these lines, the S&P rating agency considers that it is "possible" that the GDP of the euro zone will register a contraction in the first quarter of 2020 and has lowered the growth forecast it made in December from 1% to 0.5% .
"The main transmission channels are exports of goods and services, a possible disruption of supply chains and a delay in the cycle of recovery of inventory of manufactures. A contraction in GDP in the first quarter is possible," he says. the report published by the agency.
Globally, the company lowers its forecast for 2.8% this year, while for the United States the correction has been three tenths, so it now estimates that its economy will advance 1.6% in 2020.
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