IMF warns world economy is at risk of being scarred by virus

The International Monetary Fund warned the world economy is at risk of being scarred by the pandemic and called on policy makers to limit the pain.

A day after Managing Director Kristalina Georgieva said the lender would next week upgrade its global growth forecast, it released a study estimating that by 2024, the world economy will still be about 3% smaller than anticipated before the Covid-19 outbreak.

While the fallout is likely to be less sever than the aftermath of the 2008 financial crisis, the economies that are set to suffer the most are those reliant on tourism or with large service sectors, the fund said Wednesday.

Emerging and developing economies may also suffer for longer than their industrial counterparts given they provided less stimulus, it added.To mitigate the long-term costs, the IMF recommended policy makers work to support labor markets and prevent skills from atrophying.

It also encouraged investment in infrastructure, especially programs that are environmentally friendly.In another study also released on Wednesday, the fund said governments should seek to aid young and lower-skilled workers who will be among the most heavily impacted by the virus. It said analysis showed that policies aimed at job retention would help lessen the shock of the virus.