The managing director of the IMF, Kristalina Georgieva, has warned policy makers not to get complacent on the global economy’s recovery following the impact of the Covid-19 pandemic.
As the world faces the worst financial crisis since 2008, many economists have put a positive spin by claiming the economy now is much better equipped and more resilient than it was 12 years ago. While Georgieva has acknowledged there is some truth to this, she has warned against taking the economy’ stability for granted and getting complacent.
Economy ‘More Resilient’ Than 2008, But Quick Action Needed
Speaking at a Financial Times global banking summit on Wednesday, Kristalina Georgieva claimed that while the financial system is now strong & adaptable enough to cope with the colossal impact of the Covid-19 pandemic, it’s up to global financial policy makers to act quickly if a return to economic growth is to be delivered.
According to the IMF Chief, as well as acting quickly, policy makers must also co-ordinate step-by-step plans to deliver investment in several sectors, including digital technology, infrastructure and the environment. As a result of these co-ordinated investments, she believes productivity will increase accordingly.
Why the global economy is better placed to cope than 2008
Kristalina Georgieva then went on to speak about how global economies across the world are now better prepared for a quicker recovery than they were following the last financial crisis little over a decade ago. Essentially, they have learned from mistakes and taken preventative measures to aid in a more quick and efficient economic bounce-back.
Such measures include the fact that many countries have used foreign exchange reserves, central banks and independent regulatory bodies to create “substantial financial buffers”. Georgieva has claimed that even barring the incoming arrival of 3 vaccines in 2021, economic recovery could happen “faster than expected” in 2021 and that the challenges could be “manageable. However, she did go on to remind everyone that the impact of the pandemic would be serious, with global output predicted to fall around $28 trillion by 2025, compared to pre-pandemic expectations.
Tourism to take the worst hit
Although several other industries, including retail, art and entertainment have suffered, and will continue to suffer severe losses, tourism will be the worst affected. On top of the losses already suffered, 120 million jobs are expected to be lost before the industry transitions into a state of financial growth.