Washington, October 6: The shock to the global economy due to COVID-19 pandemic is not as worse as initially feared, said International Monetary Fund (IMF) chief Kristalina Georgieva. Despite Europe and North America appearing to recover from the coronavirus jolt, the GDP crisis should be considered as "far from over", she added. Indian Economy to Contract 11% in FY 2020-21: Domestic Rating Agency Icra.

The remarks were made by Georgieva in a speech she delivered ahead of the IMF-World Bank autumn meetings, scheduled to begin next week. The monetary body had, in June this year, projected the global GDP to shrink by 5 percent -- a crisis unheard of since the World War II.

The IMF had also warned of extreme poverty rising across the world, for the first time since 1990s when a concerted campaign was launched to eliminate starvation and hunger.

According to Georgieva, the progress made in the last four months allows the IMF to revise its earlier forecast. "The picture today is less dire ... allowing for a small upward revision to our global forecast for 2020," she said.

'Global Downturn Not as Bad as Feared'

The Managing Director of IMF credited the gains to the social security measures enacted by several governments around the world amidst the pandemic. The welfare measures, she said, must continue as the local impact of virus is yet to be curtailed.

The "extraordinary policy measures that put a floor under the world economy" may end up absorbing the jolt of COVID-19 to the global GDP, she said, adding that such fiscal support to households and firms cumulatively amounted to nearly $12 trillion.

The IMF chief noted that China is  recovering at a "fast pace" as compared to the rest of the world. The United States and Europe have also made considerable gains, but the risk of a complete collapse continues to loom over low-income countries.

"There is also now the risk of severe economic scarring from job losses, bankruptcies, and the disruption of education," she said, adding that the world must support governments in struggling economies to sustain financial aid for the vulnerable section of their population.

(The above story first appeared on LatestLY on Oct 06, 2020 06:17 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).