IMF warns Covid 19 pandemic will lead to the worst slump since the Great Depression as 17m Americans lose their jobs in just 3 weeks
The Covid 19 pandemic is a ‘crisis like no other’ that will lead to the worst economic crash since the Great Depression, the International Monetary Fund has warned.
As bleak figures showed one in ten US workers have claimed unemployment benefits in the last three weeks, the Washington-based watchdog said more than 170 countries around the world will see living standards fall this year.
IMF managing director Kristalina Georgieva – who will next week publish the group’s latest economic forecasts alongside chief economist Gita Gopinath – described the deadly disease as a ‘test of our humanity’.
IMF managing director Kristalina Georgieva will next week publish the group’s latest economic forecasts alongside chief economist Gita Gopinath (pictured)
In a staggering indication of the truly global threat posed by the pandemic, she pointed out that just three months ago the IMF expected living standards to rise in more than 160 countries.
Decalaring that ‘that number has been turned on its head’, she said: ‘Today we are confronted with a crisis like no other.
Covid-19 has disrupted our social and economic order at lightning speed and on a scale that we have not seen in living memory.
The virus is causing tragic loss of life, and the lockdown needed to fight it has affected billions of people.’
She added: ‘The bleak outlook applies to advanced and developing economies alike. This crisis knows no boundaries.
Everybody hurts.’ With the IMF’s 189 members set to meet at a virtual summit next week, Georgieva issued a rallying call for governments across the world, saying ‘the actions we take now will determine the speed and strength of our recovery’.
The hard-hitting intervention came as more details of the carnage inflicted by Covid-19 on the world’s biggest economy emerged. US government data revealed that just over 6.6m applied for unemployment benefits in the week ending April 4.
This brings the total number lodging unemployment claims to 16.8m over the last three weeks – roughly one in ten of the workforce.
It represents the biggest and fastest rate of job destruction since records began in 1948.
Economists said these benefit claims could cause unemployment to soar from around 3.5 per cent to 14 per cent – above the peak seen in the last financial crisis.
Shortly after the dire figures were published, the US Federal Reserve promised an extra £1.8 trillion of loans to struggling business and households.
Shares on Wall street rose in early trading with the Dow Jones up more than two per cent. The recent stock market rally also continued across Europe and in the UK, with the FTSE 100 rising 2.9 per cent.
But in another bleak report, the National Institute of Economic and Social Research warned the UK economy could shrink by between 15 per cent and 25 per cent in the second quarter.
Describing coronavirus as a ‘once in a century event’, Kemar Whyte, a senior economist at research institute NIESR, added that ‘instant and significant recovery remain a distinct possibility if the spread of the virus comes to a halt quickly’.