COVID-19 : The IMF’s warning not to go from the ‘Great Seclusion’ to the ‘Great Divide’ in Europe

The serious crisis caused by the coronavirus pandemic has hit many areas. One of those who has noticed its effects the most has been the financial sector. Therefore, the International Monetary Fund (IMF) has alerted the European Union (EU) about the danger that 2020 ‘Great Seclusion’ becomes a ‘Great Divide’ given the different impact of the recession and the capacity for recovery in the various countries of the continent.

Kristalina Georgieva, Managing Director of the IMF, reminded the European Parliament that it is GDP growth forecast of 5.5% this year globally (and 4.2% in the EU). Despite the good outlook, the leader stressed that premature withdrawal of support measures may increase inequalities between territories.

Fighting the health and financial crisis

Customizing in the EU, The economist highlighted that countries dependent on tourism such as Spain, Greece or Italy have suffered a more pronounced impact, above the 6.4% average in the Union.

To try to improve the situation, Georgieva defended the need to address the health crisis first and combat financial difficulties as a second priority issue. In this sense, it considers essential to maintain the measures to support businesses and families until the pandemic is over.

“The gradual withdrawal must follow and not precede success in the health crisis. While now is not the time to withdraw support, now is the time to determine the strength of insolvency regimes “stressed the Bulgarian leader.

Drive changes

In his opinion, the crisis should be used to promote structural changes in search of digitization and greater sustainability. Also, to stimulate growth and integration, he suggested taking more steps toward banking and capital market union, in addition to work on an international tax system that allows raising income and combating inequality.