IMF chief: Global economy now in recession

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Metro Manila (CNN Philippines, March 30) — The coronavirus pandemic has forced local and global economic activity close to a standstill, and the economic costs are rising.

The International Monetary Fund (IMF) declared a global economic recession, as the spread of the new coronavirus has stunted economic activity across the globe.

In a media briefing on March 27, IMF Managing Director Kristalina Georgieva raised concern over the long-lasting impact of the sudden halt, among them vast joblessness.

“It is now clear that we have entered a recession – as bad as or worse than in 2009,” Georgieva said.

Despite this, Georgieva said they expect a sizeable rebound in 2021, if countries succeed in containing the virus and preventing liquidity problems.

“The length and depth of this recession depend on two things - containing the virus and having an effective, coordinated response to the crisis,” she added.

In the Philippines, the National Economic and Development Authority slashed growth projections, with GDP expected to fall between -0.6% and 4.3% for 2020. This is much lower than the government’s previous 5.5-6.5% target. Slower economic growth means fewer jobs for more Filipinos.

READ: NEDA lowers PH growth forecast amid coronavirus outbreak

But economists told CNN Philippines that the country will not tip into recession this year, as government remains committed to increase spending to spur economic activity.

Bangko Sentral Governor Benjamin Diokno called the pandemic ‘a once-in-a-lifetime crisis’ that required not only an appropriate and credible response, but also a strong fiscal and monetary response.

The central bank reduced both the policy rate and reserve requirements, allowing banks to lower interest rates and pump more cash into the economy.

READ: BSP launches 'assertive' rate cut to boost economy amid COVID-19 pandemic

BDO chief market strategist Jonathan Ravelas said monetary authorities are on the right track to cushion the adverse effect of the lockdown due to COVID-19.

“The downside risks are high for the Philippines,” Ravelas added.

However, the positive outlook hinges on bets that the Luzon-wide enhanced community quarantine will not extend past April 14.

Makati Business Club Board of Trustee member Ramon del Rosario warned that a prolonged lockdown would have greater economic repercussions.

“The longer we stay in [enhanced community quarantine], the deeper will be the negative impact on our economy,” del Rosario said.

Employers Confederation of the Philippines President Sergio Ortiz-Luis, Jr. also said companies will be able to recover losses from the one month quarantine period, as long as there is no extension.

“If we extend, it might be very difficult because the big companies can withstand it for a longer time [but] micro, small and medium enterprises, they might not be able to come back,” he added.

Meanwhile, the Bankers Association of the Philippines appealed to member banks to provide Filipino customers with relief and ensure that ATM machines will have cash.

“As we move into week three of the ECQ, the impact of the crisis on the economy, including our corporate and consumer borrowers, is becoming more apparent,” Bankers Association of the Philippines President Cezar Consing said in a statement.

CNN Philippines' senior correspondent Lois Calderon contributed to this report