## From Great Lockdown to Great Transformation

_IMF News, June 9, 2020_

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**Canonical URL:** [From Great Lockdown to Great Transformation](https://www.imf.org/en/news/articles/2020/06/09/sp060920-from-great-lockdown-to-great-transformation)

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## Bibliographic details
- Published: June 9, 2020

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### Lessons from the Great Lockdown
- The current crisis is a truly global shock: by the end of 2020, "170 countries—almost 90 percent of the world—will be worse off with lower per capita income."
- This outcome reverses the IMF forecast from January that "160 countries would finish the year with larger economies, and positive per capita income growth."
- The period is labeled "the Great Lockdown" because the health emergency has forced production and consumption to a standstill—"this has never been done before."
- Global fiscal response: "massive fiscal measures—totaling nine trillion dollars, globally."
  - These measures are characterized as temporary lifelines and "a bridge to the recovery, but not a risk to the recovery as it arrives."
- Central banks acted forcefully, with the U.S. Federal Reserve providing liquidity and calming markets.
- Capital flows and market access:
  - In March, "around one hundred billion dollars left emerging markets and developing countries—three times more than during the global financial crisis."
  - In April and May, "total issuance of around seventy-seven billion dollars" from emerging markets—"almost three and a half times as much as in the same two months last year."
- Countries with buffers and sound macroeconomic policies have weathered the crisis better; those in debt distress, affected by fragility and conflict, or with weak fundamentals are at much higher risk.
- Public health response: health systems are being expanded to cope with increased demand; behavioral adaptations (social distancing, masks) are becoming widespread.

### Pathway to Recovery and Opportunities
- Reopening status: "some 75 percent of countries are now reopening."
- The choice for recovery: "building forward—not back" towards "a great transformation."
- Key risks emerging from the crisis:
  - Higher debt and higher deficits.
  - "In all likelihood—higher structural unemployment and higher levels of poverty."
  - Need to assess capacity to carry debt over time and ensure sustainability despite low interest rates.
- Major opportunities to accelerate during recovery:
  - Digital transformation:
    - Rapid modernization of work (telecommuting, flexible organization).
    - Expansion of "e-commerce, e-learning, e-transfers, e-payments, and e-governance."
    - Risk of a "great divide" if access to digital skills and infrastructure remains unequal; example: "currently only 50 percent of African businesses and citizens have access to the Internet."
  - Green transition:
    - The green economy can create jobs (examples: "insulating buildings, in reforestation, or in planting mangroves").
    - "Low carbon energy and infrastructure can also be a big booster for jobs."
    - Fund interest in providing incentives and clarity around "the risks to businesses during the transition to a low carbon economy."
  - Building fairer societies:
    - Policies that are both pro-growth and equity-enhancing (combining social safety nets with "social safety ropes" and targeted support to small and medium-sized businesses).
    - Warning that "inequality tends to go up after a pandemic."
- Globalization:
  - Caution against a retreat from globalization despite pressures to build national health security and independence; global trade contributes to "lower costs, higher incomes and lower" (text ends mid-sentence in source).

### IMF Response and Role
- The IMF has stepped up its support and is deploying resources with speed and impact.
- Post-Global Financial Crisis strengthening: resources increased "from $250 billion to $1 trillion – four times as strong."
- Operational response:
  - Providing emergency financing to countries most in need.
  - Offering flexible credit lines to countries with strong fundamentals.
  - Poised to do more and soliciting input on priorities for the Fund's contribution to recovery.

*IMF Managing Director’s Opening Remarks, US Chamber of Commerce, June 9, 2020*

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## References

- [https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva](https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva)
- [Bulgaria and the IMF](http://www.imf.org/external/country/BGR/index.htm)
- [United States and the IMF](http://www.imf.org/external/country/USA/index.htm)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
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_Source: https://www.imf.org/en/news/articles/2020/06/09/sp060920-from-great-lockdown-to-great-transformation_