Admin l Monday, August 10, 2020
WASHINGTON, United States – The Coronavirus pandemic has impacted so negatively on the United States of America such that 15 million jobs have been lost in the last four months.
The Executive Board of the International Monetary Fund (IMF) made the revelation at the conclusion of the Article IV consultation with the United States.
“The economic outlook has shifted dramatically with the rapid spread of COVID-19. 135,000 Americans have tragically lost their lives and many more have become seriously ill. The sudden-stop in activity, arising from the shutdown, has caused an abrupt contraction in activity and a surge in unemployment.
“The unemployment rate now stands at 11.1 percent and 15 million Americans have lost their job over the past four months”, the IMF board has said.
According to IMF, these job losses have disproportionately affected lower income households, those without a college education, women, African Americans and Hispanics, many of whom have insufficient buffers to cope with the unprecedented size of the economic shock.
The IMF explained that the economy is expected to contract by around 6½ percent in 2020 and expand by around 4 percent in 2021.
Besides, it said there has been a strong and proactive response to this unprecedented shock to the economy.
“Congress moved swiftly to provide substantial assistance to households, businesses and state and local governments. These important fiscal efforts have, however, come at a substantial cost. The federal government primary deficit is expected to rise from around 3 percent of GDP in FY2019 to 16 percent of GDP in FY2020 and the federal debt is expected to approach 100 percent of GDP by end-2020. State and local government deficits are also expected to more-than-double in size this year”, the IMF noted, adding that the Federal Reserve also reacted quickly as the scale of the burgeoning pandemic became clear.
On measures, to boost the economy, the Executive Directors said it broadly agreed with the thrust of the staff appraisal.
“They expressed sympathy for the loss of lives and economic hardship caused by the COVID-19 pandemic. They commended the authorities for their swift, extraordinary policy response to protect livelihoods and vulnerable sectors of the economy”, they said.
Directors noted that the recovery will likely be gradual and subject to significant risks and uncertainty.
Amid the resurgence in COVID-19 cases, IMF said a deep economic recession, and surging unemployment, Directors underscored the need to deepen public health efforts while continuing to use all policy tools to support the recovery and mitigate the scarring effects of the pandemic on the U.S. economy and society.
The IMF Directors welcomed the range of fiscal measures to provide essential lifelines to households, businesses, the healthcare sector, and sub-national governments.
They agreed that an additional sizable fiscal package would be needed to strengthen health preparedness and sufficiently boost demand, including through increased federal transfers to state and local governments.
Directors recognized that, once the pandemic is fully contained, medium-term fiscal adjustment will be necessary to put debt on a downward path.
