WASHINGTON – The head of the International Monetary Fund said Wednesday she expects the Chinese economy to recover quickly from repercussions linked to the COVID-19 outbreak, although she noted many uncertainties remain.
IMF Managing Director Kristalina Georgieva said in a statement that the “most likely scenario we now view is a V-shaped impact,” as factories in China gear up to make up for lost time and warehouses are re-supplied.
“In other words, sharp decline in economic activities in China, followed by a rapid recovery and a total impact on China relatively contained. Therefore, impact on the world economy also contained,” the Bulgarian economist added.
But she also said the Washington-based institution is in the process of gathering data to assess the full impact of the rapidly spreading pneumonia-causing virus.
While economists often make comparisons between the SARS coronavirus pandemic in the early 2000s and the current crisis, she said the impact must be “carefully” assessed by taking into account the differences.
China’s economy, the world’s second-largest, accounts for 19 percent of global gross domestic product, compared with 8 percent at the time of the severe acute respiratory syndrome outbreak from 2002 to 2003, Georgieva said.
It is much more integrated with Asia and with the rest of the world, which will make disruptions “more likely to cascade down to other countries,” she added.
“The world economy in the early 2000s was in very strong shape, whereas today we are projecting relatively modest global growth,” Georgieva said.
The IMF chief said she expects to have figures on the impact of the virus to release next week, when finance ministers from the Group of 20 major economies meet in Saudi Arabia.
The new virus, which originated the business and logistics hub of Wuhan in central China, has spread to other parts of the world including Japan, the United States and Europe, prompting falls in stock and oil prices and sparking concerns about consumer sentiment and disruptions to supply chains.