COVID-19 outbreak will drag global growth: IMF

/ 2020-02-20, Arirang News / The International Monetary Fund has warned that the noval coronavirus outbreak poses risks to the global economy’s fragile recovery this year.

In its G-20 Surveillance Note released on Wednesday, IMF pointed out the fall in global growth appears to be bottoming out, but the projected recovery is fragile. The expected increase in global economic growth to 3.3 percent this year from 2.9 percent in 2019 is a fragile one as growth in advanced economies is lagging.

It also said the coronavirus adds to the uncertainty as China has stopped production and is limiting access to virus-hit regions. This will hit the tourism industry, product prices, and supply channels of other countries, negatively impacting the global economy.

On the same note, Morgan Stanley also warned of uncertainties surrounding the virus outbreak.

Morgan Stanley predicted three scenarios in its report released on Wednesday. In the worst-case scenario, where the spread of the virus is not contained fast enough for manufacturing production in China to resume to normal levels, Morgan Stanley analysts forecast that China’s GDP growth will drop to as low as 3.5 percent in the first quarter of this year.

In this case, China’s full-year GDP growth for 2020 will come in at just 5.6 percent.
Morgan Stanley analysts said China’s manufacturing production had only reached 30 to 50 percent of normal levels as of last week.

They forecast that the situation will gradually normalize, to reach 60 to 80 percent of the usual levels by end of this month, and will be back to normal by mid-to-late March.

But they warned of uncertainties surrounding the outbreak and said that they are closely monitoring the dangers of the situation worsening to “extended disruption” in Chinese manufacturing.
Reporter : Kim Jae-hee

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