Echoing the fears of other economists in the past few weeks, International Monetary Fund head Kristalina Georgieva warns that the COVID-19 outbreak is the most pressing economic uncertainty that the world is facing right now.
Georgieva said that the unfortunate global health emergency that “we did not anticipate in January” has become one of the world economic threats atop other threats like the US-China trade war and Brexit. This is a potent reminder, according to the IMF head, of “how a fragile recovery could be threatened by unforeseen events.”
“If the disruptions from the virus end quickly, we expect the Chinese economy to bounce back soon. The result would be a sharp drop in GDP growth in China in the first quarter of 2020, but only a small reduction for the entire year. Spillovers to other countries would remain relatively minor and short-lived, mostly through temporary supply chain disruptions, tourism, and travel restrictions,” Georgieva noted.
With more than 1,700 deaths and a total of 70,548 confirmed cases as of February 16, the COVID-19 outbreak has been considered by many analysts and governments as a massive threat to market stability around the world. In an earlier forecast, analysts believe that the global outbreak becomes the biggest threat to the stock market today.
“Its global impact would be amplified through more substantial supply chain disruptions and a more persistent drop in investor confidence, especially if the epidemic spreads beyond China,” the IMF head said in the post.