The International Monetary Fund (IMF) has lowered its growth forecast for China due to the effects of the lung disease Covid-19.
The fund now expects economic growth of 5.6 percent in 2020 instead of the 6.0 percent predicted in January, said IMF head Kristalina Georgieva at the meeting of finance ministers of the leading industrialised and emerging countries (G20) in Riyadh. The growth of the global economy is expected to be 0.1 percent lower due to the coronavirus. The IMF had recently expected growth of 3.3 percent for the current year.
This scenario assumes that the Chinese economy can return to normal in the second quarter, Georgieva said. The Chinese authorities are working to mitigate the negative effects on the economy through crisis measures, liquidity supply, fiscal measures and financial support. The impact on the global economy could thus be relatively small and short-lived.
The IMF chief admitted, however, that there were still major uncertainties – for example about the spread of the virus. This makes a reliable forecast difficult. “Many scenarios can occur, depending on how quickly the virus is contained and how quickly the Chinese and other affected economies return to normal,” Georgieva said.
Global cooperation is essential to contain the virus and its economic impact, especially if the outbreak proves to be longer-lasting and more widespread. Countries with a less developed health system would be at greater risk. The IMF stands ready to help the weaker members.