The International Monetary Fund (IMF) chief economist Gita Gopinath has said that if the coronavirus pandemic isn’t controlled in the second half of 2020, it could result in a 6 percent contraction of the global economy. She asserted that India could do more to contain the virus and its impact, and added that the country hasn't approached the IMF for aid.
“Our baseline scenario is that the pandemic is brought under control by the second half of 2020, if the pandemic is not contained in the second half of this year, the world could see a 6 percent contraction,” Gopinath told
She said that there is a possibility of the pandemic’s impact lingering beyond the current year. “World economy may also see a 0 percent growth in 2021 under worse conditions than our baseline scenario.”
In the event of the pandemic continuing apace in the second half of 2020, emerging markets will need aid to prop their economies, said Gopinath. “Concessional financing, aid will be needed for emerging markets if pandemic is not brought under control by the second half of 2020.” She added that the current crisis requires strong fiscal and monetary response.
India is currently under a near-complete lockdown to contain the spread of COVID-19. The initial 21-day lockdown has now been extended for another 19 days. The complete ban on non-essential services has brought economic activity in the country to a juddering halt.
Among other measures, the Indian government has also announced financial aid for the poor to assist in the fight against the pandemic.
And Gopinath said that there is scope for more to be done in the upcoming weeks. “India has taken many steps; we see scope for more to be done in the next several weeks,” she said.
Gopinath, who was the economic advisor to the Kerala chief minister in an earlier stint, said that countries need to look at domestic financing to get out of the current crisis. “India has access to markets and can borrow: that is the right way to go,” she added.
The economist said that India has not approached the IMF for aid.
“I don't think India has approached the IMF for financial support for COVID-19. We are helping all members who are approaching us and have the firepower to provide the support needed.”
She added that India has prioritised its action very well, putting the health of its citizens and containment measures at the forefront and it should continue in the same manner.
“The Indian government has prioritised things very well. Health is the first priority, containment measures have been put in place - India should continue that."
She added: “The Indian government has also provided direct support to weaker sections. Expect that more will be done by govt in terms of scale."
Further, she Gopinath said that the ongoing crisis is unprecedented and the “tremendous uncertainty” regarding the scale of the unfolding disaster has made it difficult to use historical data for future predictions.
Gopinath added that there is a need for countries to stop looking inward and should not go backwards from globalisation in the face of the pandemic.
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