The world economy is in for a "long ascent" as it claws back from an unprecedented second-quarter fall in economic growth triggered by the COVID-19 pandemic.
This assessment was made by Kristalina Georgieva, managing director of the International Monetary Fund, in a recent speech at the London School of Economics and Political Science.
Georgieva said 2020 would still see the deepest slump in the world economy since World War Two but it wouldn't be as bad as previously forecast. In June, the fund projected a gross domestic product contraction this year due to the coronavirus. Today, however, the international outlook is less severe but recovery will be uneven, said Georgieva.
"We now estimate that developments in the second and third quarters were somewhat better than expected, allowing for a small upward revision to our global forecast for 2020," she said. "And we continue to project a partial and uneven recovery in 2021."
She said the world has reached this point, "largely because of extraordinary policy measures that put a floor under the world economy." She revealed governments have provided $12 trillion in fiscal support to households and firms.
Unprecedented monetary policy actions taken by many governments have also maintained the flow of credit, helping millions of firms stay in business.
Georgieva said the fund's revised estimate shows a 4.9% plunge in international output in the second quarter, which is similar to the previous estimate it made in late June.
Georgieva said the world faces a "long ascent" on the rocky road to recovery. She also said it's vital all countries, rich and small, should be attached to the same rope.
"The global economy is coming back from the depths of the crisis," Georgieva pointed out. "But this calamity is far from over. All countries are now facing what I would call 'the long ascent' - a difficult climb that will be long, uneven and uncertain. And prone to setbacks."
Georgieva said that as countries embark on this ascent, "we are all joined by a single rope, and we are only as strong as the weakest climbers. They will need help on the way up."
The fund holds an optimistic outlook for the international economy despite the painful truth COVID-19 will still be around in 2021 and beyond and should now be accepted as a fact of life.
"So, my key message is this: The global economy is coming back from the depths of the crisis," she said.
