The faster spread of the coronavirus will wipe out any hope of stronger growth in 2020, International Monetary Fund Managing Director Kristalina Georgieva said on Wednesday, adding that a third of the Fund's 189 member countries were now affected.
Georgieva told a news conference after speaking to the IMF's steering committee that the Fund now expects 2020 global growth will be below the 2.9% rate for 2019 and revised forecasts will be issued in coming weeks.
The changed view would represent more than a 0.4 percentage-point drop from the 3.3% 2020 growth rate that the IMF had forecast in January based on an easing of U.S.-China trade tensions.
"Growth this year will fall below the level of last year," Georgieva said. She declined to say whether the escalating health crisis could push the world into a recession.
Georgieva and World Bank President David Malpass underscored the importance of coordinated action to limit the economic and human impact of the virus.
The Fund is making available $50 billion in emergency funding for members that includes very low-interest loans that could aid poorer countries in responding to the epidemic, she said.
"It is the duration of the outbreak that at this time is difficult to predict," she said, adding that the effectiveness of mitigation measures would play a key role in determining the economic impact.
Less than two weeks ago, the IMF had said the virus could shave 0.1 percentage point off its January global growth forecast.
Georgieva said that the milder impact scenario was based on expectations that the coronavirus would be largely contained within China. But that view changed over the last week as the virus spread rapidly outside China to more than 70 countries.
The shift has vastly increased uncertainty and caused demand worldwide to weaken, as individuals and businesses take precautions to avoid infection, she said. This has hit the trade and tourism sectors particularly hard and caused a major drop in demand for oil and other commodities, she added.
While the spread of the virus has slowed in China, its growth rate also would be below the IMF's most recent forecast for 5.6% in 2020, Georgieva said. But she said that the Fund was encouraged by the restart of some production in China, now about 60% recovered with China aiming to reach 90% in coming weeks.