IMF, G-20: Recovery from recession at risk

Fresh restrictions due to resurgence of COVID-19 cited

Leaders of the global economy are warning that the recovery from this year’s recession is at risk and could be derailed as the resurgence of COVID-19 forces fresh restrictions on households and companies.

Both the International Monetary Fund (IMF) and the Group of 20 (G-20) – which comprises the world’s richest nations – sounded the alert as leaders of the G-20 prepare for a virtual summit this weekend, hosted by Saudi Arabia. The IMF noted progress on a vaccine but also said elevated asset prices point to a disconnect from the real economy and a potential threat to financial stability.

“While global economic activity has picked up since June, there are signs that the recovery may be losing momentum, and the crisis is likely to leave deep, unequal scars,” officials at the Washington-based fund said in a report published Thursday. “Uncertainty and risks are exceptionally high.”

The UK, Germany, and France as well as parts of the US and Australia are among those with new curbs on movement and businesses to contain the pandemic. They’re not as stringent as the lockdowns imposed earlier in the year, but are still enough to damage growth.

“The recovery is uneven, highly uncertain and subject to elevated downside risks, including those arising from renewed virus outbreaks in some economies,” the G-20 said in a draft communique seen by Bloomberg. “We are determined to continue to use all available policy tools as long as required to safeguard people’s lives, jobs, and incomes, support the global economic recovery, and enhance the resilience of the financial system.”