Coronavirus pandemic requires wartime measures if global economy is to survive, International Monetary Fund warns

Coronavirus pandemic requires wartime measures if global economy is to survive, International Monetary Fund warns


April 02, 2020 08:31:17

The International Monetary Fund (IMF) has told governments to enact wartime measures to fight the coronavirus pandemic.

It has predicted the “war” phase of the pandemic will last at least one to two quarters.

The IMF warned governments would need to mobilise to provide supplies to the health industry, cash transfers to those who had who lost their jobs and “exceptional support” like wage subsidies to companies.

“The success of the pace of recovery will depend crucially on policies undertaken during the crisis,” IMF economists wrote in a blog post.

“If policies ensure that workers do not lose their jobs, renters and homeowners are not evicted, companies avoid bankruptcy, and business and trade networks are preserved, the recovery will occur sooner and more smoothly.”

Australia and other countries have already unveiled similar policies with a massive rollout of economic stimulus.

On the markets, US stocks plunged after US President Donald Trump said there could be up to 240,000 deaths from coronavirus in North America.

“This is going to be a rough two-week period,” he said at a White House press conference.

“When you look at night the kind of death that has been caused by this invisible enemy, it’s incredible.”

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The Dow Jones Industrial Average fell more than 1,000 points at its low point, as a plunge in new orders for US-made products pushed investors away from stocks to safer assets. It lost 974 or 4.4 per cent to 20,944.

The S&P 500 fell 4.4 per cent to 2,471 and the Nasdaq lost 340 points or 4.4 per cent to 7,361.

US manufacturing activity contracted less than expected in March, but disruptions caused by the pandemic pushed new orders received by factories to an 11-year low, which has reinforced economists’ view the economy is in recession.

The outlook was further dented by other numbers showing private payrolls dropped last month for the first time in more than two years as businesses shut down because of strict measures to contain the virus.

Banks suffered on speculation they could be forced to cut dividends after European lenders including HSBC and Standard Chartered Bank halted payouts and share buybacks.

European stocks sank as well despite European Union plans to save jobs.

The FTSE 100 index slid 3.8 per cent or 217 points to 5,455.

The euro extended its drop as manufacturing data from the Eurozone painted a bleak picture, with Italy’s purchasing managers’ index posting a record fall.

The local share market is expected to open lower today. The ASX SPI 200 is down more than 3 per cent or 169 points to 5,055.

West Texas oil rose to $US21.18 a barrel after Mr Trump promised to meet with feuding producers, Saudi Arabia and Russia.

Spot gold gained to around $US1589 an ounce.

The Australian dollar fell 1 per cent to around 60.72 US cents.

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