Int'l community strives for economic normality as data shows steep downturn amid COVID-19


(Photo: Xinhua)

BEIJING, April 17 (Xinhua) -- A run of newly-released economic data on both status quo and outlook for the year have unnerved the world, as a global economic recession caused by the COVID-19 pandemic seems to linger.

Racing against the clock, international organizations and various countries have rolled or are rolling out a spate of actions, in a relentless effort to arrest current frailties and seek a potential, though bumpy, path back to economic strength.


According to data from the National Bureau of Statistics (NBS) released Friday, China's gross domestic product stood at 20.65 trillion yuan (about 2.91 trillion US dollars) in the first quarter (Q1) of 2020 amid the COVID-19 impact, down 6.8 percent year on year.

"The situation of epidemic control and prevention continued to improve with a basic interruption in epidemic transimission at home," the NBS said, adding that the resumption of work and production has accelerated and fundamental industries are growing steadily.

Friday's data showed China's job market improved slightly in March, with the surveyed unemployment rate in urban areas standing at 5.9 percent, down 0.3 percentage points from the previous month.

The International Monetary Fund (IMF)'s latest World Economic Outlook (WEO) report released Tuesday claimed that the global economy is on track to contract "sharply" by 3 percent in 2020.

The report showed that advanced economies will contract significantly by 6.1 percent in 2020.

More specifically, the report said the US economy is expected to contract by 5.9 percent this year, the Euro Area will see a decline of 7.5 percent, Japan's economy will shrink by 5.2 percent, and Britain's by 6.5 percent.

The European Central Bank said Thursday that Eurozone industrial production fell 1.9 percent from a year earlier in February 2020, following a revised 1.7 percent drop in the previous month and compared to market expectations of a 2 percent contraction.

In the Eurozone, industrial production measures the output of businesses integrated in industrial sectors of the economy, such as manufacturing, mining, and utilities.

In the United States, another 5.25 million jobless Americans filed for unemployment benefits for the week ending April 11, the US Bureau of Labor Statistics reported Thursday, bringing the four-week total of unemployed to a worrisome 22 million.

US retail sales plunged in March by the most on record, while manufacturing output slid by its most in 74 years, according to official data released Wednesday, fueling fears of a deepening recession.

Across Asia, economic growth is projected to halt to zero in 2020 for the first time in 60 years, Changyong Rhee, director of the International Monetary Fund's (IMF) Asia and Pacific Department, told a virtual news briefing on Wednesday.

"These are highly uncertain and challenging times for the global economy. The Asia-Pacific region is no exception. The impact of the coronavirus on the region will be severe, across the board, and unprecedented," he said.

Countries reliant on tourism, travel, hospitality and entertainment for their growth are "experiencing particularly large disruptions," IMF Chief Economist Gita Gopinath told a virtual news conference on the WEO report.

"Emerging market and developing economies face additional challenges with unprecedented reversals in capital flows as global risk appetite wanes, and currency pressures, while coping with weaker health systems, and more limited fiscal space to provide support," Gopinath said.


The Asian Infrastructure Investment Bank (AIIB) said Friday that it is doubling available funds under its COVID-19 crisis recovery facility to 10 billion US dollars due to high client demand.

The decision came after requests for funding exceeded the 5 billion dollars originally allocated for emergency relief, as clients require immediate assistance in areas including health infrastructure and pandemic preparedness to alleviate health care pressures.

The policy-setting body of the IMF on Thursday also pledged collective action to mitigate the health and economic impact of COVID-19.

"The fund has revamped the fund's toolkit by doubling access levels to emergency facilities, expanding the use of precautionary lines, establishing a new short-term liquidity line, and considering other options to help countries meet their financing needs," Lesetja Kganyago, International Monetary and Financial Committee chairman, told a news conference on Thursday.

The move came after Group of 20 (G20) finance ministers and central bankers on Wednesday agreed to "support a time-bound suspension of debt service payments for the poorest countries that request forbearance" following a teleconference meeting.

"Just seeing how the G20 united around debt standstill for the poorest members gives me that confidence that whatever is necessary, we will collectively do in the face of this tremendous crisis," IMF Managing Director Kristalina Georgieva said Wednesday.

To resist coronavirus-driven economic contractions, many countries, including China, are trying to provide ample liquidity to markets and ease financial stress suffered by small-and medium-sized companies.

China's central bank on Wednesday lowered the rate of 100 billion yuan (about 14.1 billion US dollars) worth of one-year medium-term lending facility (MLF) to financial institutions to 2.95 percent, in a bid to help banks and borrowers weather the ongoing economic troubles.

Meanwhile, the implementation of the 50 basis-point reduction on reserve requirement ratio for small and medium-sized banks starting Wednesday is expected to unleash around 200 billion yuan (about 28.2 billion dollars) of long-term capital into the market.

"In our view, it (the rate cut) sent a positive signal by showing that policy makers are willing to step up on monetary easing. Given the baby steps taken since early February, we see it as an important step towards lowering funding costs," Bank of America Global Research said in a report on Wednesday.

"With those stepped-up monetary easing measures, we expect credit growth to continue to increase, helping drive further easing in financial conditions in China," the report said.

"Chinese policy makers have reacted very strongly to the outbreak of the crisis ... If the situation becomes aggravated, they have more room to use fiscal, monetary policies," Rhee said. "Whether that would be needed will really depend on progress in containing the virus."

Gopinath also urged policy makers to plan for the recovery. "As containment measures come off, policies should shift swiftly to supporting demand, incentivizing firm hiring, and repairing balance sheets in the private and public sector to aid the recovery," she said.

"Assuming the pandemic fades in the second half of 2020 and that policy actions taken around the world are effective in preventing widespread firm bankruptcies, extended job losses and system-wide financial strength, we project global growth in 2021 to rebound to 5.8 percent," she said, adding that the recovery is "only partial."