IMF urges countries to continue strong fiscal and monetary support

The International Monetary Fund is urging countries to continue strong fiscal and monetary efforts to support their economies given continued uncertainty about the risks posed by a resurgence in COVID-19 cases and new variants.

“The global economy is at a critical juncture,” IMF spokesman Gerry Rice told reporters in an online briefing. “There remains a great deal of uncertainty … and the prospect for a still very difficult period ahead with infection surges and people continuing to suffer.”

Rice said the IMF would release an updated global economic forecast on Jan. 26 that would reflect recent developments, including development and distribution of COVID-19 vaccines and fresh stimulus measures in the United States and Japan.

In October, the Fund forecast a 4.4% global GDP contraction for 2020, followed by a rebound to growth of 5.2% for 2021.

More than 92.22 million people have been infected by the novel coronavirus globally and nearly 2 million have died, according to a Reuters tally.

IMF chief economist Gita Gopinath last week said economic stimulus measures in the United States and Japan would help to power a recovery in their economies in the second half of this year, and suggested possible upgrades were in the offing.

But Rice underscored the need to continue unprecedented fiscal and monetary efforts to support economic recoveries.

It was “certainly no time to let up on our efforts,” Rice said, calling for continued strong monetary and fiscal measures.

U.S. economic stimulus approved at the end of 2020 – and reports of more funding to come – were encouraging, he said.

Rice also condemned the deadly violence at the U.S. Capitol last week by U.S. President Donald Trump’s supporters.

“These events underscore the importance of peaceful and civil discourse, and the need to nurture and protect strong and independent institutions,” Rice said.

In Japan, Rice said the Fund was forecasting a gradual recovery in 2021, with some upside relative to its last projection of 2.3% growth, given strong growth in the third quarter and a third stimulus package announced in December.

“We expect the recovery to pick up in the second quarter, supported by pent-up demand and restored business confidence, along with support from fiscal and monetary policies,” he said, without providing details of any new forecast.