IMF Calls for International Cooperation on Novel Coronavirus... Recommends Fiscal and Monetary Stimulus Policies for South Korea's Economy

[Asia Economy New York=Correspondent Baek Jong-min] The International Monetary Fund (IMF) on the 19th (local time) urged international cooperation, warning that the novel coronavirus infection (COVID-19) could negatively impact the global economy. It recommended expansionary fiscal policy and stimulus monetary policy for Korea.

In the 'G20 Outlook Report' published on the 19th (local time), the IMF stated, "Global growth has bottomed out, but the recovery outlook remains fragile."

The IMF forecasted that the global economic growth rate would rise from 2.9% last year to 3.3% this year, but assessed that advanced economies remain weak, indicating a vulnerable structure.

The IMF added, "If the COVID-19 outbreak continues longer or uncertainties about transmission persist, supply chain disruptions could worsen and cause more severe global shocks," emphasizing that international cooperation is essential.

The IMF said, "For sustained recovery, policymakers must carefully balance the mix of domestic policies," and evaluated that in some countries, easing fiscal and monetary policies played a role in avoiding economic slowdown and continuing to support economic activity.

The IMF called for active fiscal and monetary policies as long as fiscal space allows, naming Korea, Australia, and Germany as countries with sufficient fiscal capacity.

Furthermore, despite having fiscal capacity, Korea, which is below its potential growth rate, was urged again to maintain expansionary fiscal policy. The IMF suggested maintaining accommodative monetary conditions until inflation approaches the target rate, identifying Korea as a country needing additional stimulus monetary policy.