Rely on strong policy action for quick recovery; IMF Chief

Managing Director (MD) and Chairwoman of International Monetary Fund (IMF), Kristalina Georgieva said that the governments around the world should be cautious of pulling out the fiscal and monetary policy support “prematurely”.

“We must be determined to underpin the road to recovery with continuous strong policy actions. Do not withdraw fiscal policy support and monetary policy support prematurely,” the Head of IMF said while speaking at the Caixin Summit.

The US-based multilateral lender has predicted the global economy to shrink 4.4 percent this year because of the economic damages due to the pandemic. The IMF predicted that the world economy will grow by 5.2 percent next year.

The IMF head said that this year has given the world economy the greatest challenge since the Second World War and the Great Depression.

She warned that the path to recovery is likely to be challenging and would require “determined collective action” on the part of global governments, with a need to tackle the health crisis dominating.

“Because of the decisive action of governments and central banks, we managed to put a floor under the world economy. And we are seeing the green shoots of recovery. We cannot possibly achieve a sustainable recovery unless we have a durable exit from the health crisis. That means taking action to protect people from the virus while it is still with us – and most importantly taking action to have vaccines and treatment and make sure that they are available everywhere.”

More than 53 million people worldwide have so far been affected by the COVID-19. According to Worldometers, which monitors the pandemic, around 1.2 million people have been infected with the disease.

Hope emerged for the global economy last week when US pharmaceutical firm Pfizer and Germany’s BioNTech reported their vaccine trial proved 90 percent successful against the coronavirus.

Christine Lagarde, former head of the IMF and current president of the European Central Bank (ECB), said in a statement that the pandemic has created a “big river of uncertainty.”

Although many layers of confusion were eliminated by the election of Joe Biden as President of the United States and progress in the Brexit talks, the ECB president remained worried about new, mutated types of the virus.