IMF sees 0.4 percentage points cut to China GDP growth from coronavirus

11:07 | 25/02/2020 Cooperation

The coronavirus outbreak will cut China's economic growth by 0.4 percentage points to 5.6 pct this year and have a "relatively minor and short-lived" impact on the world economy under the IMF's baseline scenario for the epidemic. But it warned there are too many uncertainties to allow reliable forecasting.

imf sees 04 percentage points cut to china gdp growth from coronavirus
People go shopping at a supermarket in Chongqing, China

Global growth in 2020 will be about 0.1 percentage points lower than previously expected in this scenario, IMF managing director Kristalina Georgieva said at the G20 finance ministers meeting in Saudi Arabia on 22 February. The IMF last month forecast global growth at 3.3pc this year and said China's economy will possibly expand by 6pc.

The World Health Organisation's assessment is that strong and co-ordinated measures will be able to contain the spread of the virus in China and globally, Georgieva said. The IMF's baseline scenario assumes that announced policies are implemented and China's economy returns to normal in the second quarter.

"But we are also looking at more dire scenarios where the spread of the virus continues for longer and more globally, and the growth consequences are more protracted," she said, without giving details.

The G20 gathering came at a time of "particular uncertainty" for the world economy, Georgieva said in separate remarks yesterday after the conclusion of the meeting. "Even in the case of rapid containment of the virus, growth in China and the rest of the world would be impacted. Of course, we all hope for a V-shaped, rapid recovery — but given the uncertainty, it would be prudent to prepare for more adverse scenarios."

There are now almost 80,000 confirmed cases of the coronavirus globally. China accounts for 97pc of these, although the outbreak there appears to be slowing, with the government reporting 409 new cases yesterday, down from 648 a day earlier.

But the coronavirus is spreading outside China, including in South Korea, Italy and Iran, raising the prospect of a global outbreak.