China’s economy has been seriously affected by the novel coronavirus, prompting the International Monetary Fund (IMF) to downgrade its forecast for the world’s second largest economy to the lowest growth in several decades.
During the meeting of the G-20 finance ministers and central bank governors in Riyadh, Saudi Arabia, on Saturday, Feb. 22, IMF cut China’s economic growth to 5.6% in 2020 from 6.0% estimated in January. Such a growth rate would represent the lowest level since 1990, Nikkei Asian Review reported.
They cited the coronavirus outbreak as one of the top global economic challenges.
The epidemic has brought the Chinese economy nearly to a standstill amid efforts to contain the disease. China did not even send its finance minister or central bank governor to the summit.
The IMF forecast China’s economy to “return to normal” in the April-June quarter.
“The impact on the world economy would be relatively minor and short-lived,” IMF Managing Director Kristalina Georgieva said at the meeting.
In that scenario, IMF projected global growth to rise from an estimated 2.9% in 2019 to 3.3% in 2020—a downward revision of 0.1 percentage point for 2019 and 2020.
Georgieva said the IMF is also looking at more dire scenarios where the spread of the virus continues for longer and more globally, and the growth consequences will be more protracted.
According to Japanese Finance Minister Taro Aso, the spread of coronavirus could pose a serious risk to the macro economy through a halt in production activities, interruptions of people’s movement, and cut-off of supply chains.
Speaking at the summit, French Finance Minister Bruno Le Maire admitted that the world economy is facing a clear slowdown due to the so-called coronavirus, and questioned if a recovery of the world economy would be a V-shape or an L-shape one.