International Monetary Fund chief downbeat on global economic recovery

IMF's managing director Kristalina Georgieva. (Shutterstock photo)
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Updated 10 May 2020

International Monetary Fund chief downbeat on global economic recovery

  • The IMF’s April projection for a 3 percent contraction in the global economy would mark the steepest downturn since the Great Depression of the 1930s

WASHINGTON:  The head of the International Monetary Fund (IMF) signaled a possible downward revision of global economic forecasts on Friday, and warned the US and China against rekindling a trade war that could weaken a recovery from the coronavirus pandemic.

Kristalina Georgieva, the IMF’s managing director, told an online event hosted by the European University Institute that recent economic data for many countries was coming in below the fund’s already pessimistic forecast for a 3 percent contraction in 2020.

“With no immediate medical solutions, more adverse scenarios might unfortunately materialize for some economies,” Georgieva said. “It is the unknown about the behavior of this virus that is clouding the horizon for projections.”

The IMF’s April projection for a 3 percent contraction in the global economy would mark the steepest downturn since the Great Depression of the 1930s. The IMF forecast a partial rebound would follow in 2021, but warned that outcomes could be far worse, depending on the course of the pandemic.

The US economy — the largest in the world — has been particularly hard hit by widespread shutdowns aimed at containing the virus. US government data on Friday showed the unemployment rate surging to 14.7 percent last month. The White House said joblessness could hit 20 percent in May.

US President Donald Trump has threatened to punish China for its handling of the virus by imposing new tariffs, and on Friday suggested he could end a Phase 1 US-China trade deal.

Top US and Chinese trade officials said they would press ahead with implementing the initial trade deal, but some observers say China’s promised purchases of US goods are running far behind the pace needed to meet the first-year goal of a $77 billion increase over 2017 levels.

Georgieva warned that a retreat into protectionism could weaken the prospects for a global recovery.

Asked how concerned she was that rising US-China tensions could jeopardize the global economy, Georgieva said: “It is hugely important for us to resist what may be a natural tendency to retreat behind our borders.”

Reigniting world trade was critical for a global economic recovery. “Otherwise,” she added, “costs go up, incomes down, and we will be in a less secure world.”

Georgieva said the IMF had already provided emergency funding to 50 of the 103 countries that had requested aid. Poor countries remained at high risk given a sharp drop in remittances and falling commodity prices, even if mortality rates from the virus were lower than in some richer countries.

The IMF’s chief economist, Gita Gopinath, told an event hosted by the Council on Foreign Relations on Thursday that the situation had worsened since March when the IMF projected that emerging markets and developing countries would need $2.5 trillion in external financing to manage the health and economic crisis.

“This crisis is likely to last longer,” she said. “And so the needs will go up, even above that number.” 


Arab News recording exposes Nissan lawyer’s lie on IMF bailout for Lebanon

Updated 01 June 2020

Arab News recording exposes Nissan lawyer’s lie on IMF bailout for Lebanon

LONDON: Arab News has published the recording of an interview with a Nissan lawyer after he denied saying that a bailout of Lebanon by the International Monetary Fund (IMF) was linked to the extradition of fugitive tycoon Carlos Ghosn.

The former Nissan chairman fled to Beirut in December from Japan, where he faced charges of financial wrongdoing.

In a story published in Arab News Japan on Saturday, Sakher El Hachem, Nissan’s legal representative in Lebanon, said the multibillion-dollar IMF bailout was contingent on Ghosn being handed back to Japan. 

The lawyer said IMF support for Lebanon required Japan’s agreement. Lebanese officials had told him: “Japan will assist Lebanon if Ghosn gets extradited,” the lawyer said

“For Japan to agree on that they want the Lebanese authorities to extradite Ghosn, otherwise they won’t provide Lebanon with financial assistance. Japan is one of the IMF’s major contributors … if Japan vetoes Lebanon then the IMF won’t give Lebanon money, except after deporting Ghosn.”

On Sunday, El Hachem denied making the comments. “The only thing I told the newspaper was that there should have been a court hearing on April 30 in Lebanon, but it was postponed because of the pandemic,” he said. In response, Arab News published the recording of the interview, in which he can be clearly heard making the statements attributed to him. 

Japan issued an arrest warrant after Ghosn, 66, escaped house arrest and fled the country.

Now listen to the recording: