New crown pneumonia outbreak hits market
IMF calls for accelerated recovery of market supply and demand
New York News reporter Gao Weidong reported: International Monetary Fund (IMF) president Christina Georgieva said at a press conference on March 4 that the new crown pneumonia epidemic had caused a major impact on the global economy. With the rapid spread of the epidemic, more than a third of the members were directly affected. This is no longer a regional event, but a global problem.
Georgiyeva said that the epidemic also caused an abnormal impact on market supply and demand. Preventive measures to limit flows, credit crunches and higher business costs will disrupt supply and demand. Due to higher uncertainty, market demand will also decline, and these effects will spill over across borders. Experience shows that one third of the economic losses caused by illness are direct losses, manifested as loss of life, closure of workplaces and isolation of personnel. The other two-thirds are indirect losses, manifested in diminishing consumer confidence and business practices, and tightening financial markets.
However, Georgiyeva also stressed that the current financial system is more resilient than it was before the 2008 financial crisis. The biggest challenge at the moment is addressing uncertainty. In any case, she said, the level of global growth in 2020 will be lower than last year. It is still difficult to predict how much it will decline. It all depends on how the epidemic develops and the timeliness and effectiveness of actions taken by countries. Health systems and countries with weaker response capacities are particularly challenged, and she called for a global coordination mechanism to accelerate the restoration of demand and supply.
Georgieva pointed out that, in terms of finance, the first priority is to ensure adequate front-line health-related expenditures to protect people's well-being, care for patients, and slow the spread of the virus. Second, macro-economic policy needs to take action to address the impact on supply and demand. As demand weakens, additional policies will also be needed to stimulate demand and ensure adequate credit supply. Third, sufficient capital flows are needed to offset the risks to financial stability.
Georgiyeva said the IMF has a total borrowing capacity of about $ 1 trillion and has rapidly allocated about $ 50 billion through its emergency financing facilities for low-income and emerging market countries that may need support. Among them, the poorest countries can get $ 10 billion in loans at zero interest rates through the Quick Credit Fund. The IMF will also provide debt relief to eligible countries through the Disaster Control and Relief Trust Fund.
On the same day, the International Monetary and Financial Committee (IMFC) held a conference call and issued a statement on the new crown pneumonia epidemic, calling on members of the IMF to work together to address the challenges of the epidemic.
The statement said that the 189 members of the International Monetary Fund should work together to tackle global challenges related to the new crown pneumonia epidemic. We sympathize with all parties affected by the outbreak. The economic and financial impact of the epidemic has also spread globally, creating uncertainty and damaging the near-term economic outlook. We are determined to provide the necessary support to mitigate the impacts, particularly on the most vulnerable countries. We call on the International Monetary Fund to use all available financing tools to help member countries in need. We believe that by working together, we will overcome the challenges we face and restore economic growth and prosperity that benefit everyone.
The International Monetary and Financial Committee is composed of 24 directors and usually meets twice a year. The daily work of the IMF is performed by the Executive Board, whose work is guided by the International Monetary and Financial Committee.
Gao Weidong