The International Monetary Fund (IMF) on Wednesday said that it supports India’s proactive decision of imposing a nationwide lockdown to contain the spread of the deadly coronavirus despite the economic slowdown of the country.
Chang Yong Rhee, the Director of the IMF’s Asia and Pacific Department said that entered the pandemic turmoil in the midst of a crunch credit crunch-induced slowdown and its recovery prospect becomes more uncertain but still the lockdown was necessary to minimize the spread of coronavirus.
The impact of the coronavirus on the Asia-Pacific region will be severe, across the board, and unprecedented, he said, adding that Asia’s growth in 2020 will come to a standstill.
He also said that there is hope in 2021 if containment policies succeed.
According to Rhee, Asian countries need to use all policy instruments in their toolkits and in doing so, policy tradeoffs will be inevitable and will depend on policy space.
Spelling out a set of recommendations for the countries in the Asia-Pacific region, Rhee said the first priority is to support and protect the health sector to contain the virus and introduce measures that slow contagion.
Noting that containment measures are severely affecting economies, he said targeted support to hardest-hit households and firms is needed.
Observing that the pandemic is also affecting the financial market functioning, he urged countries to use monetary and macro-prudential regulations flexibly to provide ample liquidity, ease the financial stress of industries and SMEs.