IMF likely to downgrade global growth due to coronavirus, says spokesman

WASHINGTON (REUTERS) – The fast-spreading coronavirus will have an impact on global economic growth and the International Monetary Fund is likely to downgrade its growth forecast as result, an IMF spokesman said on Thursday (Feb 27).

IMF managing director Kristalina Georgieva flagged the expected downgrade on Saturday during a meeting of finance officials from the world’s 20 largest economies in Riyadh.

In a statement, she said the virus outbreak would likely lower China’s economic growth this year to 5.6 per cent, down 0.4 percentage point from its January outlook, and shave 0.1 percentage point from global growth.

“We are likely to downgrade our growth projections for the world,” IMF spokesman Gerry Rice told a regular briefing.

He added that he had no new numbers beyond those in Georgieva’s statement, but said more details would emerge as the IMF prepared to release a new World Economic Outlook in April.

US financial markets took a hit on Thursday, as the rapid spread of the coronavirus outside China intensified fears about the impact on economic growth and corporate earnings.

The S&P 500 and Nasdaq are now more than 10 per cent below their intraday record highs hit on Feb 19, while the Dow Jones Industrial Average is 10 per cent off its Feb12 peak.

“Clearly, the virus is going to have an impact on growth. A lot just depends on the speed of recovery in China and other countries, the spillover effects, the effects on supply chains, and the extent to which other countries may be significantly affected,” Rice said.

He said he expected a decision soon on the impact of the coronavirus for the IMF and World Bank meetings in April, noting that several format options were under consideration.

Reuters reported on Wednesday that officials were considering scaling back the meetings or holding them by teleconference.

Rice said the IMF was in constant contact with officials from the World Health Organisation, the World Bank, regional development banks and others about the impact of the virus.

The Fund has said that coordinated or synchronised action by the international community would be helpful if the impact worsened, but Rice said that point had not yet been reached.

“This is something that really can only be tackled via international cooperation. It is not something that stops at international borders,” Rice said.

He said the IMF supported a range of economic measures taken by China to offset the negative impact of massive work stoppages caused by the virus.

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