IMF calls for enhancing coordinated action to cushion economic impact of COVID-19

BEIJING - As the continued spread of COVID-19 has weighed on the global economy and caused market nosedives, International Monetary Fund (IMF) chief Kristalina Georgieva on Monday urged "increased coordinated action" to boost investors' confidence and stabilize the economy.

A total of 152 countries and regions reported 167,511 confirmed cases of COVID-19 as of Monday morning, an increase of 13,903 infections from the previous day, according to the latest daily report released by the World Health Organization (WHO).

"Constant contact and close coordination are the best medicine to ensure that the economic pain inflicted by the virus is relatively short-lived," Georgieva wrote in a blog, which is part of a special IMF series on the response to the coronavirus.

Markets nosedive

US stocks opened sharply lower on Monday, with all the three major indexes plunging due to uncertainty posed by the continued spread of COVID-19.

The Dow Jones Industrial Average shed 2,999 points, or 12.9 percent, to close at 20,188.52, marking its second worst percentage loss in history behind the "Black Monday" crash in 1987.

The S&P 500 index declined 8 percent shortly after the opening bell, triggering a key circuit breaker that halted trading for 15 minutes. It was the third time that trading halts have been tipped since last week.

The market selling came after the US Federal Reserve's recent stimulus moves. On Sunday, the Fed cut its benchmark interest rate by a full percentage point to near zero and pledged to boost its bond holdings by at least $700 billion amid mounting fears over the COVID-19 outbreak.

The 100-basis-point cut came just less than two weeks after an earlier inter-meeting move, which slashed the benchmark interest rate by 50 basis points, failed to calm jittery investors.

US President Donald Trump said Monday that the United States could be coping with COVID-19 until July or August and the country's economy "may be" heading toward a recession. However, he predicted growth would bounce back strongly.

The number of COVID-19 cases in United States rose to over 4,600 as of Monday night, adding over 1,000 in the past 24 hours, according to the Center for Systems Science and Engineering at Johns Hopkins University.

Meanwhile, stock markets in Europe, Asian and Latin America all experienced sharp decline on Monday after heavy losses last week.

UN Secretary-General Antonio Guterres said on Friday that the novel coronavirus is infecting the global economy, warning that financial markets have been hard-hit by uncertainty, and global supply chains have been disrupted, while investment and consumer demand have plunged, with a real and rising risk of a global recession.

UN economists estimate that the coronavirus crisis could cost the global economy at least $1 trillion this year, Guterres said.

More measures

The IMF chief noted in her blog that many governments have already taken significant steps, including Sunday's "bold, coordinated moves" on monetary policy, but "even more needs to be done."

Georgieva laid out three action areas for the global economy, namely, fiscal stimulus, monetary policy and the regulatory response. All the work is most effective when done cooperatively, she said.

The leaders of Group of Seven (G7) industrialized nations on Monday pledged to "use all policy tools" to address the economic impact.

"We resolve to coordinate measures and do whatever it takes, using all policy tools, to achieve strong growth in the G7 economies, and to safeguard against downside risks," leaders of Britain, Canada, France, Germany, Italy, Japan and the United States said in a joint statement.

"To this end, we are mobilizing the full range of instruments, including monetary and fiscal measures, as well as targeted actions, to support immediately and as much as necessary the workers, companies, and sectors most affected," the leaders said.

More countries have rolled out new or upgraded measures to cushion the economic impact of COVID-19.

New Zealand on Tuesday launched "the most significant peace-time economic plan in modern New Zealand history," a NZ$12.1-billion ($7.36 billion) package amounting to 4 percent of its gross domestic product.

South Korea's central bank cut interest rate to an all-time low of 0.75 percent Monday in its first emergency move since the 2008 global financial crisis.

Italian Prime Minister Giuseppe Conte announced Monday that his government has approved a 25-billion-euro (almost $28 billion) decree to shore up the national health care system as well as workers, businesses and families grappling with hardship.

"This is a powerful measure," said the prime minister. "We never considered fighting a flood with rags and buckets. We are trying to build a dam to protect businesses, families and workers."

Nearly 2,500 new cases were recorded in Italy in past 24 hours, taking the total number in the country to more than 23,000, Italian Civil Protection officials said Monday.

In Latin America, Brazil's National Monetary Council has held an emergency meeting to approve measures to facilitate bank loans and renegotiate debt burdens for both companies and individuals, the Central Bank of Brazil said Monday.

Chile's central bank reduced interest rates and unveiled other measures, saying the economy "has seen a swift and significant deterioration as a result of the global spread of COVID-19."

The IMF chief also reiterated that the multilateral lender stands ready to help its members, noting that it could mobilize $1 trillion lending capacity to provide necessary support.

"In the end, our answers to this crisis will not come from one method, one region, or one country in isolation," said Georgieva. "Only through sharing, coordination, and cooperation will we be able to stabilize the global economy and return it to full health."