IMF Is Confident China’s Economy Will Bounce Back From Virus
The head of the International Monetary Fund (IMF) said it has confidence in the resilience of China’s economy amid fears that the outbreak of a new coronavirus will harm the world’s second-largest economy.
“We support China’s efforts to respond by taking measures with all the strength of its health system, but also by the recent fiscal, monetary and financial actions,” IMF Managing Director Kristalina Georgieva said in a video posted Monday on the IMF website. “We are confident in the resilience of China’s economy.”
“On behalf of all the membership of the IMF, all staff and management, I would like to express our deep sympathies to all those affected by the serious situation related to coronavirus,” Georgieva said.
The remarks come as China grapples with a SARS-like coronavirus that has rapidly spread across the country and overseas. The death toll stood at 492 as of 10 a.m. Beijing time on Wednesday, with 24,363 cases confirmed in China and 180 overseas.
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The epidemic has hit economic activity hard — notably in the travel, tourism, leisure and retail sectors. To contain the spread of the virus, the Chinese central government extended the national Lunar New Year holiday to Feb. 3 from Jan. 31. Companies in some regions, including the city of Shanghai and province of Guangdong have been told not to resume operations until Feb. 9. Other countries, including the U.S., Japan and Australia, have barred entry to visitors from China, while many airlines from those countries have canceled flights to China.
Many economists expect the epidemic to negatively impact China’s GDP growth and have lowered their forecasts for both the first quarter and full year. Economists at research firm Oxford Economics said in a Feb. 3 note that they cut their projection for full-year GDP growth to 5.4% from 6%, with the impact from the outbreak mainly felt in the first quarter. Goldman Sachs expects first quarter GDP expansion will slide to 4% and full year 2020 growth to 5.5% from 5.9%, with potential for a more prolonged outbreak to drop growth to 5% or below, according to a report released Friday.
The IMF chief, however, struck a more positive tone and said it is still too soon to gauge the economic impact of the outbreak, despite the immediate “obvious” impact on travel, tourism and manufacturing in China.
“China has taken very dramatic actions to restrict the spread of the virus and work is underway on a vaccine,” Georgieva said Thursday at an event at the Center for Global Development. “So let’s say for this quarter there will very likely be a negative impact. What would happen beyond this quarter we must observe and assess.”
In the meantime, the World Bank said it is monitoring the broader economic and social impacts of the epidemic, according to a statement published on its website on Monday.
“We support China’s efforts to respond including its efforts to maintain resilience in its economy,” the World Bank said. China’s central government has taken numerous steps to protect its financial markets from disruption by the outbreak, including pumping a net 550 billion yuan ($79 billion) into the interbank market earlier this week.
The World Bank said it is reviewing financial and technical resources to support countries affected by the epidemic, as well as lifesaving work to mitigate the impact of the virus and rein in its spread.
Immediate support could include technical assistance on disease surveillance, food safety and crisis response, as well as sharing international experience in managing similar crises, World Bank President David Malpass said in a Jan. 29 statement.
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