It is too early to tell the economic toll from the COVID-19 outbreak in China, but the hit to global growth should be “mild,” IMF managing director Kristalina Georgieva said on Wednesday.
The IMF is expecting a “V-shaped impact,” with a sharp decline in activity in China followed by a sharp recovery, meaning there likely would only be a “mild impact on the rest of the world,” Georgieva said on CNBC.
However, she added: “It is still too early to make projections,” and the global economy is “somewhat less strong” than it was when China faced the SARS virus epidemic in 2002 to 2003.
Photo: AP
“China was different, the world was different. This virus is clearly more impactful and the world economy then was very strong,” she said.
The IMF projects China’s economy to grow 6 percent this year, compared with 10 percent in 2003.
US officials likewise are reluctant to provide forecasts, but said the impact on the US economy probably would be short-lived.
“There’s no question it’s having a significant impact in China,” US Secretary of the Treasury Steven Mnuchin told legislators on Wednesday.
However, for the US economy, he said: “I don’t expect that the coronavirus will have an impact beyond this year.”
He echoed comments from US Federal Reserve Chairman Jerome Powell, saying: “We’re obviously monitoring very carefully.”
In two days of testimony to US Congress, the Fed chief was upbeat about the economy, which is experiencing a record 11th year of growth, confirming there is little interest in raising interest rates.
Powell said the Fed is keeping close tabs on the COVID-19 outbreak that has killed hundreds and sickened tens of thousands of people since last month, nearly all in China.
“We do expect that there will be some effects” on the US economy, Powell said, adding that he expects to begin seeing these reflected in economic data “relatively soon.”
Factory shutdowns and travel restrictions aimed at containing the virus’ spread within China and to the rest of the world are expected to disrupt supply chains.
US exports to China would also be suppressed, he said, as would Chinese tourism to the US.
Financial markets offer another pathway for impact on US growth, he said.
Additional reporting by Reuters
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