IMF chief sees ‘mild’ virus impact on global economy

Washington  – It is too early to tell the economic toll from the virus outbreak in China, but the hit to global growth should be “mild,” International Monetary Fund chief Kristalina Georgieva said Wednesday.

The death toll from the new coronavirus epidemic in China has climbed past 1,350, but hopes have risen that the outbreak could peak later this month.

The IMF is expecting a “V-shaped impact,” with a sharp decline in activity in China followed by a sharp recovery, meaning there likely will only be a “mild impact on the rest of the world,” Georgieva said on CNBC.

But she cautioned: “It is still too early to make projections,” and the global economy is “somewhat less strong” than it was when China faced the SARS virus epidemic in 2003.

“China was different, the world was different. This virus is clearly more impactful and the world economy then was very strong,” she said.

The IMF projects China’s economy will grow six percent this year, compared to 10 percent in 2003.

US officials likewise are reluctant to provide forecasts but say the impact on the American economy probably will be short-lived.

“There’s no question it’s having a significant impact in China,” Treasury Secretary Steven Mnuchin told legislators Wednesday. But for the US economy “I don’t expect that the coronavirus will have an impact beyond this year.”

He echoed the comments from Federal Reserve Chairman Jerome Powell, saying, “we’re obviously monitoring very carefully.”

Meawhile, Asian markets fell on Thursday after a dramatic spike in the number of coronavirus deaths and cases in mainland China, with traders concerned about the economic impact of the epidemic.

Chinese authorities have changed the way they count infections from the virus – officially named COVID-19 – and the latest reports propelled the nationwide death toll to 1,355 and the infection count to nearly 60,000.

Tokyo’s benchmark Nikkei 225 index closed 0.1 percent down, while Shanghai ended the day 0.7 percent lower.

Elsewhere in afternoon trade, Hong Kong dipped 0.2 percent, Seoul dropped 0.2 percent, and Singapore lost 0.3 percent.

Sydney and Taipei, however, were higher.

The new virus numbers dampened the positive cue from Wall Street overnight, where the three main indexes all set fresh records.