The world economy has suffered a "sudden stop," according to International Monetary Fund head Kristalina Georgieva. The fund is now seeking ways to prevent the decline from getting even worse.
The International Monetary Fund (IMF) said Friday it was looking for a practical approach to prevent indebted countries from "falling off the cliff" due to the coronavirus outbreak.
"It is clear that we have entered a recession," said IMF chief Kristalina Georgieva.
The global economy had experienced a "sudden stop" as a result of the pandemic, she said.
Immense pressure on emerging markets suffering from lost commerce has ensued since the virus began to take hold globally, reducing exports and substantial capital outflows.
Georgieva told reporters that emerging countries needed a minimum of $2.5 trillion (€2.3 trillion) in financial resources to endure the pandemic. Internal reserves and borrowing in local markets will not be enough, so substantial funding from the IMF, other institutions and bilateral creditors will be required.
Worse than 2008
According to Georgieva, the 2020 recession and its implications are likely to be worse than the consequences of the global financial crisis of 2008.
The ongoing pandemic is set to have a deep economic impact and recovery could not be expected until 2021 at the earliest, Georgieva said.Even then, this target can only be achieved if the virus is contained and liquidity problems are not allowed to turn into issues with solvency.
So far, the world has seen more than half a million coronavirus cases and upwards of 25,000 related deaths.