The IMF supports fiscal and monetary action taken so far by the US government to battle the COVID-19 pandemic, Managing Director Kristalina Georgieva told reporters in a virtual news conference Thursday (March 27) in Washington.
She was asked if the US is already in recession, and how long it may stay there.
“As Chairman Powell said, actually, I think it was yesterday. The U.S. is in recession, as is the rest of the advanced rest of the advanced economies world. And in a big chunk of developed and emerging markets in developing economies. How severe? We are working now on our projections for 2020. In a short while prior to the Spring Meetings, we will come up with these projections. And at that time, we will have assessed more thoroughly the data that is now coming on the impact of containment on the economy. Let me just stress that while containment is the main reason for the economy to stand still and get into a recession,” said Georgieva.
She was also asked about how long shelter in place policies should remain and their impact on the economy.
“Containment is very necessary to come out of this period and step into recovery. Until the virus is not contained, it would be very difficult to go to the lives we love.”
“And in that context that you're asking on unemployment and other and other factors. We are assessing very carefully any now projections. We will be able to answer this question, as you would appreciate. We are seeing the early impact of this containment measure in the United States and elsewhere. And we are working towards a more deliberate assessment. We don't want to rush with our numbers. It is very important to be prudent in taking the, if I can use a health terminology, taking the temperature of the economy,” she said.
“On the 2 trillion package: very welcome step by the US for two reasons. One, because it is absolutely necessary to cushion the world's largest economy against an abrupt drop of economic activities,” Georgieva noted.
“It is very important for the American people. It is also important for the rest of the world, given the significance of the United States. Second, very welcome because it is well-targeted. First, beef up the capacity of the health system. A hundred and seventeen billion dollars for hospitals. Second, helping workers and their families to be protected against a sudden loss of income so they can meet their daily needs. Third, protecting firms, large companies and SME's - small and medium sized companies. Protecting them is so critical. They stay afloat. Then when recovery comes, momentum can be injected very quickly.”
“And this is being done with an eye to actually incentivize companies to keep their workers on the payroll. There they would benefit if they do so. Finally, the measures that are there to protect the financial system,” she said
“Would that be sufficient? We only can answer this question when we know how long it takes to contain the pandemic,” Georgieva concluded by saying.
For more on the IMF response to the COVID-19 pandemic: https://0-www-imf-org.library.svsu.edu/en/Topics/imf-and-covid19