Search ForexCrunch

“The coronavirus outbreak poses a serious threat to the world economy,” International Monetary Fund (IMF) Managing Director Kristalina Georgieva said on Wednesday. “189 member countries committed to coordinated action to fight the virus. Over one-third of IMF members are affected by coronavirus.”

“Demand is falling due to higher uncertainty, increasing precautionary behaviour,” Georgieva added. “The shock of coronavirus is unusual, affects supply and demand and restricts mobility.”

Market reaction

The 10-year US Treasury bond yield erased its gains and dropped below the critical 1% in the last minutes, suggesting that risk-off flows are starting to dominate the markets.

Additional takeaways

“The global financial system is much more sound than before the 2008-09 financial crisis.”

“Global growth in 2020 is expected to dip below last year’s levels but the depth of the impact is difficult to predict.”

“The top priority in terms of fiscal response is ensuring front line health-related spending.”

“Urgent for authorities to lean forward in funding outbreak-related health spending, match demand with the supply of needed medical equipment.”

“The outbreak calls for a coordinated response mechanism.”