WASHINGTON (AP) — The head of the International Monetary Fund said Friday it is clear that the global economy has now entered a recession that could be as bad or worse than the 2009 downturn.
IMF Managing Director Kristalina Georgieva said the 189-nation lending agency was forecasting a recovery in 2021, saying it could be a “sizable rebound.” But she said this would only occur if nations succeed in containing the coronavirus and limiting the economic damage.
“A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery but erode the fabric of our societies,” she told reporters at a news conference following a telephone conference with finance officials from the 24 nations that make up the IMF’s policy-setting panel.
AMERICA’S $19trn commercial and residential mortgage market is jittery as investors begin to fear that laid-off workers and shut-down firms will struggle to repay their debts. Plenty of investors—such as real-estate investment trusts—are highly leveraged. As the value of mortgage-backed securities has dropped sharply they have begun to face margin calls on their debt from their bankers. Some have warned investors that they are unable to meet cash calls. Demand for new residential mortgages is likely to suffer, too. Lockdowns and economic uncertainty have stopped homebuyers looking.
Many retail outlets “will never reopen their doors,” analysts say in underlining the outbreak’s “debilitating” impact.