New waves of social unrest could erupt in some countries if government measures to mitigate the coronavirus pandemic are seen as insufficient or unfairly favoring the wealthy, the IMF said in a new report on Wednesday.
Governments had already spent nearly $8 trillion to combat the pandemic and mitigate the economic fallout, but more fiscal stimulus would be needed once the crisis abated, the global lender said in its semi-annual Fiscal Monitor.
The spike in spending would sharply widen fiscal deficits, with global public debt set to rise 13 percentage points to more than 96% of gross domestic product in 2020, it said.
On Tuesday, the IMF forecast the global economy to shrink 3.0% during 2020 as a result of the pandemic, but warned that its forecasts were marked by “extreme uncertainty” and outcomes could be far worse.
Efforts to halt the disease have shut down large swaths of the global economy, with emerging market and developing countries likely to be hardest hit.
While mass protests are unlikely with strict lockdowns in place, unrest could spike when the crisis appeared to be under control, Vitor Gaspar, director of the IMF’s fiscal affairs department, told Reuters in an interview.
To avert further unrest following numerous protests in many parts of the world over the past year, policymakers must communicate with affected communities to build support for measures to tackle the virus, he said.
“This is something we have emphasized: it is crucial to provide support to households and firms that are made vulnerable by the crisis,” he said. “The goal is to support and protect people and firms that have been affected by shutdowns.”
Tensions are already becoming evident as lockdowns leave day laborers and many in the informal economy without jobs or food.
