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Speaking to PTI ahead of the annual spring meeting of the IMF and the World Bank here, Vitor Gaspar, Director of Fiscal Affairs Department, International Monetary Fund, said the COVID-19 pandemic was hitting economies through multiple channels.
“The pandemic outbreak is causing supply disruptions and the social distancing efforts necessary to contain the spread of the virus have imposed a large burden on workers and their families,” he said.
“The expected speed and depth of the contraction in the global economy is unprecedented, much worse than during the 200809 financial crisis. As such, there is no doubt that the government needs to take swift concerted action with fiscal tools taking a prime role to contain the virus’ spread and limit the damage to livelihoods of people,” Gasper said.
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Countries are already taking significant fiscal measures amounting to about USD 8 trillion globally. Moving forward, governments can play a role to enable a recovery once the pandemic is contained, he said.
Noting that the coronavirus is having a profound impact around the globe, he said the human cost of the pandemic has intensified at an alarming rate, with confirmed cases in almost every part of the world.
It is affecting the productive capacity of countries as the containment measures implies less people working and disruptions to supply chains.
It is affecting demand, as fewer jobs and less income means less spending locally and globally.
Countries are also affected by the tightening of global financial conditions and some are hit by capital outflows. Finally, the large fall in commodity prices is hurting commodity (especially oil) exporters. What started as a health crisis is now a major global economic crisis, he said.