Since the introduction of the coronavirus ‘covid-19’, so far investors have withdrawn $ 83 billion from emerging economies including India, putting more pressure on these countries than developed countries. Kristalina Georgieva, managing director of the International Monetary Fund (IMF), gave this information in a statement released after Monday meeting through video conferencing with finance ministers and heads of central banks of G-20 countries. She also said that this year there will be a slowdown in the global economy i.e. the growth rate will be negative. The recession can be at least as large as or even larger than the global financial crisis of 2008.
Crisis for emerging economy
kristalina georgieva said that developed countries are more equipped to deal with this crisis, but the emerging economy and many low-income countries pose a big challenge. Due to the capital withdrawal from these countries, they have been adversely affected and domestic activities will be severely affected. Since the beginning of this crisis, investors have withdrawn $ 83 billion from emerging economies. This is the largest capital withdrawal in any period.
Recession set in Global Economy
She said that the IMF has special concerns with low-income countries. The IMF is working closely with the World Bank to provide loans to them. The IMF chief said that the slowdown in the global economy is certain this year, but the year 2021 is expected to improve. In order to improve next year, it is necessary to control the infection of ‘covid-19’ as soon as possible. kristalina georgieva said that so far around 80 countries have requested for help from the IMF. Work is being done to provide emergency loans to other international financial institutions. Currently, the organization has $ 1 trillion available.
Reduction in production of various types of products worldwide
According to Prathamesh Mallya, Chief Analyst Non-Agri Commodities and Currency of Angel Broking, due to increasing infection of coranavirus where investors are prioritizing the current problems, the prices of metals continue to fall. Due to the lockdown in several cities by governments, production of various types of products has decreased worldwide and its effect can be seen in the prices of crude oil as well. Below is a summary of the past week of commodities.
Gold: Due to the increasing infection of coronavirus worldwide, there has been a steady decline in the prices of gold and last week it declined by 1.4%. The virus has infected 2.3 lakh people worldwide and has hurt the prospects of global growth, due to which people are relying on liquidity instead of bullion and this has led to a fall in the price of gold. This has a direct impact on the US dollar. Investors have accumulated cash by selling gold, causing the US dollar to rise sharply. Another major reason for the falling gold price is the release of a $ 1 trillion stimulus package by the US government, which could deliver $ 1,000 to Americans over the next two weeks to sustain the economy. In the current week, it is expected that gold will be below 40 thousand rupees per 10 grams.
Copper: Copper prices have also been affected due to an environment of fear caused by coronavirus around the world. Base metal prices have closed down by 9.9 percent in the London Metal Exchange as investments have shown greater confidence in the US dollar, yielding better returns. Base metal prices have increased significantly due to increase in dollar liquidity by large central banks.
Crude Oil: WTI crude prices fell by 14 percent last week as production increased by Saudi Arabia and Russia, despite lower demand from several major countries around the world, such as China, India and the European Union. The price of WTI crude was reduced by 30 dollars per barrel due to Coronavirus due to decrease in the market of US Federal Reserve and other countries and due to huge reduction in China’s production. While the demand due coronavirus has reduced on one hand, the fight between Russia and Saudi Arabia has increased the production of crude oil. According to officials, Saudi Arabia will continue to supply 12.2 million barrels per day for the next few months.