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Too soon to tell economic impact of virus on China: IMF chief

She cited the experience of the SARS epidemic in 2002-2003, which slowed growth in the short term, but then the economy righted itself/COURTESY

WASHINGTON, United States, Jan 31 – It is still too soon to gauge the economic impact of the virus outbreak on China’s economy, beyond the first three months of the year, International Monetary Fund chief Kristalina Georgieva said Thursday.

The outbreak of the coronavirus has sickened nearly 8,000 people in China with the death toll at 170, prompting the World Health Organization to declare an international emergency.

And the rapid spread of the respiratory illness has prompted businesses and factories to shut down, and airlines around the world have canceled flights, prompting concerns about the hit to China’s economy and beyond.

“It would be irresponsible to offer any speculations around what may happen,” Georgieva said at a forum.

She cited the experience of the SARS epidemic in 2002-2003, which slowed growth in the short term, but then the economy righted itself.

However, that epidemic occurred at a time when the Chinese economy was booming. The current outbreak comes as authorities are managing a slowdown amid the battering from the trade conflict with the US.

“The immediate impact is obvious. We have travel, tourism, manufacturing in China, and a little bit beyond China in Asia being impacted,” Georgieva said, adding that for this quarter, very likely there would be some negative impact.

But beyond that “we just observe and assess.”

The IMF on January 20 projected the global economy would grow by 3.3 percent in 2020, above the 2.9 percent level last year, due in part to an easing in US-China trade tensions.

Earlier in the day, IMF spokesman Gerry Rice told reporters the fund is monitoring the situation “very closely,” and reading “the economic indicators on a real-time basis.”

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“If global supply chains were systematically affected or global financial markets were significantly impacted by increasing uncertainty, then obviously the impact would be greater,” Rice said, adding that the effects would be more severe if the ailment spreads to other parts of Asia from China.

Georgieva said the outbreak highlights the “unpredictability” that has become the norm in the world.

She stressed that “preparedness, prevention, early action … has to get into the bloodstream of policymakers, it is, whether it is pandemics or a climate shock or geopolitical tension.”

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