World Economy Faring Better but Crisis Far from Over, says IMF Chief

Low-income countries have not had the ability to spend as much to support jobs and businesses, and will also need help to deal with their debt burdens, including through increased grants and debt restructuring.

The IMF late Monday approved a six-month extension of its suspension of debt service payments to 28 of the world's poorest countries.

Georgieva said the Covid-19 crisis presents an opportunity to create a better, more equitable economic system.

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Likening the crisis to World War II when leaders "forged a better world in the worst possible moment," she called for governments to continue extending lifelines to workers and businesses as long as they are needed.

"Cut the lifelines too soon, and the Long Ascent becomes a precipitous fall."

But she noted, "We cannot afford simply to rebuild the old economy, with its low growth, low productivity, high inequality, and worsening climate crisis," and called for more spending on green jobs which can generate even greater employment.

"This will require both stimuli for job creation, especially in green investment, and cushioning the impact on workers," she said.

"Safeguarding social spending will be critical for a just transition to new jobs."

She referred to an IMF report released Monday showing that increasing spending by just one percent of GDP could create 33 million new jobs.

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The World Trade Organization likewise said Tuesday that the devastation of global trade during the pandemic will not be as bad as originally forecast, contracting by just 9.2 percent this year, rather than 12.9 percent.

"World trade shows signs of bouncing back from a deep, Covid-19-induced slump, but WTO economists caution that any recovery could be disrupted by the ongoing pandemic effects," the WTO said in a statement. 

(Writer: Heather Scott)

Source: http://u.afp.com/3zrz