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March 21, 2020

IMF: Global Impact of COVID-19 will be Severe, but Temporary

© Funtap/AdobeStock

© Funtap/AdobeStock

As many markets struggle to find their footing in the face of the global COVID-19 pandemic, a recent podcast with Martin Muhleisen, director of the IMF's Strategy, Policy, and Review department, helps to lend insight and perspective from the view of the International Monetary Fund.

Muhleisen  said the impact of the global coronavirus pandemic will be “quite severe,” but temporary, saying that the overall good health of the world economy and high employment rates should help to provide buffers to blunt the impact

“I would think that financial institutions more broadly are in a better shape than, say for example, before the global financial crisis. A lot of work has gone in to making sure that they were capitalized, and that they are resilient to different types of shocks,” he said.

Muehleisen said the immediate keys to success in combatting the virus is the coordination of governments and response globally. “The better organized and the more coordinated the health responses to this crisis, the more quickly it may be possible that confidence returns,” he said.

Commodity prices, especially a sharp drop in oil prices, posed a further challenge for many countries: hurting the exporters, aiding the importers. 

“There's also the question of commodity prices. That is really important for many countries. The sharp drop in commodity prices is a challenge for those who rely on revenues from commodity exports. It is a boon to other countries that are commodity importers,” said Muhleisen. “So again, it's not the same for every country, but for these countries that that face a loss of revenue that's quite sharp and potentially somewhat long lasting, that will just add to the complications from the situation that they're already facing.”

Muhleisen  concluded: “There will be a recovery. It is a temporary crisis. And yes, also in a sense every crisis is a chance to learn. What I personally, and what my colleagues and our institution is experiencing is a very strong sense of global cooperation.”

Hear the full IMF podcast here: https://www.imf.org/en/News/Podcasts/All-Podcasts/2020/03/20/martin-muhleisen-coronavirus  

International Monetary Fundoil prices