IMF ends it first ever virtual Spring Meetings

Business

The International Monetary Fund (IMF) and its sister lending organization, the World Bank has ended their annual Spring Meetings of the 189-nations last Friday, 17th April 2020. Those meetings, along with a gathering of Finance Ministers and Central Bankers of the world’s 20 biggest economies, held virtually for the first time in light of the coronavirus outbreak. The Regional Economic Outlook: Sub-Saharan Africa (SSA) is published twice a year, in the Spring and Fall. In this latest report, the authors said that SSA countries are facing an unprecedented health and economic crisis that threatens to throw the region off its stride, reversing the development progress of recent years and slowing the region’s growth prospects in the years to come. “The Covid-19 pandemic has spread through almost all countries. And as in the rest of the world, the health crisis has precipitated an economic crisis reflecting three large shocks: disruption of production and a sharp reduction in demand; spillovers from a sharp deterioration in global growth and tighter financial conditions; and a severe decline in commodity prices.” In its forecast, the IMF said that the region’s economy is projected to contract by 1.6 percent this year—the worst-reading on record. Furthermore, by exacting a heavy human toll, upending livelihoods, and damaging business and government balance sheets, the crisis could retard the region’s growth prospects in the years to come. No country will be spared. “The rapid spread of the virus, if left unchecked, is threatening to overwhelm weak healthcare systems.” As in the rest of the world, the health crisis the Fund said has precipitated an economic crisis in the region reflecting three large shocks to economic activity. Firstly, the strong containment and mitigation measures that countries have had to adopt to limit the spread of the COVID-19 outbreak will disrupt production and reduce demand sharply. Secondly, plummeting global economic growth together with tighter global financial conditions are having large spillovers to the region; and lastly, the sharp decline in commodity prices, especially oil, is set to compound these effects, by exacerbating challenges in some of the region’s largest resource-intensive economies. Across countries, the Fund has projected that the less diversified economies will be hit the hardest, reflecting the impact of lower commodity prices and containment efforts. Among the non-resource-intensive countries, those that depend on tourism are expected to witness a severe contraction because of extensive travel restrictions, while emerging market and frontier economies will face the consequences of large capital outflows and tightening financial conditions. The large adverse shocks they say will exacerbate social conditions and aggravate existing economic vulnerabilities. “The measures that countries have had to adopt to enforce social distancing are certain to imperil the livelihoods of innumerable vulnerable people.” Given the limited social safety net available, “people will suffer.” Moreover, the pandemic is reaching the shores of the continent at a time when budgetary space to absorb such shocks is limited in most countries, thus complicating the appropriate policy response.

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