As the global economy gradually recovers from the COVID-19 crisis, all countries are facing "the long ascent" -- a difficult climb that will be "long, uneven, and uncertain," Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva said on Tuesday.
"Global economic activity took an unprecedented fall in the second quarter of this year, when about 85 percent of the world economy was in lockdown for several weeks," Georgieva said at a virtual event held by the London School of Economics ahead of the annual meetings of the IMF and the World Bank Group.
In June, the IMF revised down its forecast for the global economy amid mounting COVID-19 fallout, projecting the global output to decline by 4.9 percent in 2020, 1.9 percentage points below its April forecast.
In her speech Tuesday, Georgieva said the picture today is less dire. "We now estimate that developments in the second and third quarters were somewhat better than expected, allowing for a small upward revision to our global forecast for 2020," she said. The updated forecast will be released next week.
The better-than-expected recovery is largely due to "extraordinary policy measures," which has put a floor under the world economy, Georgieva said.
According to IMF estimation, governments across the globe have provided around 12 trillion U.S. dollars in fiscal support to households and firms, along with "unprecedented" monetary policy actions.
Despite the upward revision to global forecast, the IMF chief noted that there is a remarkable gap in response capacity between advanced economies and poorer nations, adding that emerging markets and low-income and fragile states "continue to face a precarious situation."
"The global economy is coming back from the depths of the crisis. But this calamity is far from over," Georgieva said, noting that the path ahead is clouded with "extraordinary uncertainty."
She highlighted the record-high level of global public debt, which is a result of fiscal response to the crisis and the heavy output and revenue losses. The IMF estimates that global public debt will reach about 100 percent of GDP in 2020.
"There is also now the risk of severe economic scarring from job losses, bankruptcies, and the disruption of education," Georgieva said.
Because of this loss of capacity, the multilateral lender expects global output to remain well below pre-pandemic projections "over the medium term."
The IMF chief noted there are both upside and downside risks to the outlook. Faster progress on health measures, such as vaccines and therapies, could speed up the ascent. "But it could also get worse, especially if there is a significant increase in severe outbreaks," she said.
Georgieva laid out four immediate priorities for governments to confront the crisis and push for transformations: defend people's health; avoid premature withdrawal of policy support; adopt flexible and forward-leaning fiscal policy; deal with debt -- especially in low-income countries.
The IMF has provided financing "at unprecedented speed and scale" to 81 countries, reaching over 280 billion dollars in lending commitments -- more than a third of that approved since March, Georgieva noted.
She also urged policy-makers to build a more resilient economy, one that is greener, smarter, more inclusive and more dynamic, noting that a difficult climb requires new paths to the mountain.
"We know that previous generations had the courage and resolve to climb the mountains they faced. It is now our turn; this is our mountain," the IMF chief added.