Turkey : Findings and recommendations for Corona in 6 items from the IMF

International Monetary Fund (IMF) Chief Economist Gita Gopinath has written a striking article about the negative effects of the corona virus on the global economy and the economic measures that can be taken.

Noting that the impact of the Corona outbreak on the economy is deeper than the previous crisis and outbreaks, Gopinath warned that if governments and policy makers do not take urgent measures, many companies may go bankrupt and people may lose their jobs.

The beginning of the line from Gopinath’s article published on the official website of IMF, which indicates that a debt crisis may arise and there may be sudden stops in countries dependent on foreign financing:


Due to supply and demand shocks different from previous crises, this health crisis will have serious negative effects on the economy.

Great targeted policies are needed to support the economy during the epidemic. The aim should be to prevent the temporary crisis from causing permanent damage to people and companies through unemployment and bankruptcies.

The human cost of the outbreak has reached alarming proportions and is spreading to more and more countries.

Ege Cansen: This crisis is the opposite of othersEge Cansen: This crisis is the opposite of others

2- Worse than the 2008 crisis

– Economic results have already reached a visible level in countries where the epidemic was most affected. For example, activity in the manufacturing and service sector in China declined dramatically in February. The situation is worse than the 2008 Global Financial Crisis and other outbreaks.

Manufacturing sector purchasing managers (PMI) index in China. The red line represents the financial crisis that started in September 2008, the blue line represents the swine flu (H1N1) epidemic that started in April 2009, the yellow line represents the same period last year, and the green line the corona virus (covid_19) epidemic that started in January 2020. Point 0 indicates the first month of the epidemic and crisis.

Supply and demand in dry bulk transportation, such as building materials, fell in line with the most severe phase of the global financial crisis.

– Labor supply has fallen because people cannot work to protect their children or to take care of their children because schools have been closed. Many people cannot go to work because of quarantines. Capacity utilization rates are decreasing. Production is disrupted due to disruptions in supply chains.

– Due to loss of income, fear of contamination and increased uncertainty, demand is falling, people spend less. Workers may be fired or companies may not be able to make payments. Especially in the tourism sector, this situation is felt more pronounced.
The decrease in the share values ​​of the airline companies has reached the levels of terrorist attacks on September 11, 2001.

Iran knocks IMF's door for coronaIran knocks IMF’s door for corona


– Due to the fact that consumers and companies may not be able to repay their debts in time, loan interest rates increase and financial conditions tighten. Higher borrowing costs will put pressure on financial vulnerability accumulated in low interest years. This increases the risk of debt failure. A decrease in loans may increase the economic decline caused by supply and demand shock.


– Supply and demand shock can cause greater effects through international trade and financial connections when it is experienced in many countries simultaneously, which can further damage global economic activity. Countries dependent on external financing may face a sudden stop risk and in this case, intervention in foreign exchange markets and temporarily bring control to capital movements.

Governments and policymakers should take and implement concrete comprehensive and targeted financial, monetary and financial measures to assist households and companies affected by the process.

– By providing cash support, wage incentive, and tax deduction to the damaged households and companies, they can survive. Examples of these policies are that Italy extends the deadlines for tax payments for companies in the regions affected by the epidemic and expands the wage support fund to provide income support to the unemployed.

Extraordinary steps to stop the crisis from central banksExtraordinary steps to stop the crisis from central banks


– For those who are laid off, unemployment insurance can be temporarily strengthened by increasing the time and amount of unemployment benefits and by stretching the conditions.

States should consider financial support for paid sickness and family leave, and ensure that those who have to stay at home due to illness or childcare do not have a fear of losing their job during an epidemic.


Central banks should be prepared to offer ample liquidity to banks and other financial companies, especially those that lend to small and medium-sized firms, who may be less prepared for a sharp deterioration in their business. Governments can offer temporary and targeted loan guarantees for the near-term liquidity needs of these firms and the maturity of debts may be extended temporarily.

– Broader monetary incentives through interest rate cuts and asset purchases can boost confidence and support financial markets.

– The international community should act in coordination and help countries with limited health capacity. The IMF therefore allocated $ 50 billion of emergency funding for developing countries with low incomes.

$ 50 billion loan package for corona virus from IMF$ 50 billion loan package for corona virus from IMF