Global economy set to strengthen, says the IMF

THE International Monetary Fund reiterated that global economic growth appears to be bottoming out, though it also cautioned that risks including the coronavirus dominate the outlook.

“After a marked slowdown last year, global economic activity is expected to moderately strengthen in 2020,” the IMF said in a surveillance note released yesterday. “Monetary and fiscal policy actions were instrumental in supporting activity, thus avoiding a deeper downturn.”

The latest report is being issued ahead of this week’s meeting of finance ministers and central bankers at a Group of 20 summit in the Saudi capital, Riyadh. Policy makers worldwide are grappling with an unprecedented virus outbreak in China that now looms over the global economy just after a cooling of trade frictions last year. The IMF produces the notes to help inform G-20 meetings.

“Downside risks to the outlook continue to dominate,” the IMF said, noting that a further spread of the coronavirus or renewed trade tensions could help derail any recovery. The outbreak “is disrupting economic activity in China as production has been halted and mobility around affected regions limited.”

The IMF said about a month ago in its latest world economic outlook that the global economy will likely strengthen in 2020, albeit at a slightly weaker pace than previously anticipated amid trade threats and Middle East tensions. That report was released on January 20, before travel was halted in Wuhan, China, where the virus originated.

The fund yesterday left unchanged its January projection that global growth will accelerate to 3.3 percent this year from 2.9 percent in 2019.

China’s short-term outlook largely depends on containing the virus. Bloomberg