IMF sees resilient Chinese economy in mid- to long-term despite coronavirus outbreak

WASHINGTON (REUTERS) – China’s economy is expected to remain resilient in the medium- to long-term, although the shorter term impact of the fast-moving coronavirus remains unclear, the International Monetary Fund said on Thursday (Feb 13).

IMF spokesman Gerry Rice said there was still too much uncertainty to forecast the impact on the Chinese and global economy, but the IMF hoped to have more insights when G20 countries meet in Riyadh, Saudi Arabia at the end of next week.

Concerns about the virus spiked again on Thursday after the Chinese province at the centre of the outbreak reported a record rise in deaths and thousands more infections using a broader definition, while Japan became the third place outside mainland China to suffer a fatality.

Rice said the Fund welcomed China’s efforts to contain the spread of the virus disease, officially named Covid-19, and mitigate its economic impact, including through economic and fiscal measures, adding that the IMF stood ready to help Beijing as needed.

“Over the medium to long term we remain confident that China’s economy is resilient,” Rice told a regular news briefing. “It’s a large economy, and China has the resources and the resolve to meet this challenge.”

Rice said the Fund hoped for a scenario in which the outbreak triggered a sudden but brief downturn followed by a robust catchup to growth, or what economists describe as a V-shaped scenario, but other scenarios were possible.

There were many unknown factors, Rice said, noting the increase in reported infections and deaths.

“There’s a lot of uncertainty, it’s fast moving. We just need to be very vigilant and try and monitor this as best we can,” he said.

Rice said it was premature to forecast the impact of the virus outbreak, but clearly more negative scenarios could affect global supply chains and a push by some U.S. companies to diversify.

IMF managing director Kristalina Georgieva on Wednesday told CNBC the baseline scenario forecast a mild impact on the global economy, as happened during the SARS outbreak in 2002-2003.

But she said this virus was different and China now accounted for 19 per cent of the global economy, up from 8 per cent then. During the earlier outbreak the world economy was also stronger, she said.

For now, the IMF still expected the U.S. economy to grow by 2 per cent in 2020, Georgieva said, while cautioning that the forecast could change if the outbreak triggered a more serious impact on supply chains.

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