Kristalina Georgieva, the head of the International Monetary Fund (IMF), issued a stark warning on Sunday that the world’s ‘fragile’ economic recovery could be completely derailed by the coronavirus epidemic as it spreads across the globe and becomes pandemic.
Already over 1,200 cases have been confirmed in 26 countries other than China.
Georgieva, speaking at a meeting of G20 finance ministers in Saudi Arabia, said the coronavirus has ‘disrupted economic activity in China and could put recovery at risk’, and she urged finance ministers to put ‘the global economy on a more sound footing’, before admitting: ‘Even in the case of rapid containment of the virus, growth in China and the rest of the world would be impacted.’
Exactly what the world’s finance ministers could do to put capitalism on a ‘more sound footing’ Georgieva didn’t say. Indeed, all she could offer was the pledge that the IMF is ready to provide ‘grants for debt relief to the poorest, most vulnerable countries’ through a special trust set up to cope with the fall out from natural disasters.
This is a completely empty promise from the IMF.
Only this month, currency experts from the G20 group of the leading world economies issued a report stating clearly that the IMF can no longer act as the world’s ‘lender of last resort’ as it only has resources amounting to 1% of all the world debt liabilities.
Already facing the disastrous impact of Trump’s trade war, the totally unexpected coronavirus epidemic is pitching the world capitalist economic system into the abyss of complete collapse.
The most vulnerable countries that Georgieva talks about having to bail out, in fact, encompass the entire world as the virus is now reported to have spread throughout Asia, the Middle East and into Europe with Italy having to lock-down 11 towns in the north in response to an unexpected outbreak.
The financial markets suffered a massive drop in share prices on Monday as speculators panicked. Russ Mould, an investment specialist, noted yesterday: ‘There has been so much complacency in recent weeks from investors, despite clear signs that China’s economy is facing a large hit and that supply chains around the world are being disrupted.’
He added: ‘Investors didn’t see the coronavirus as a serious threat to corporate earnings. They may now be reappraising the situation.’ Not just reappraising but making a mad dash to get their money out of shares in companies that are reliant on supplies from China – including car manufacturers and hi-tech industries.
Across the world major motor manufacturers are either closing or proposing to close down plants, while similar closures throughout manufacturing industry are propelling countries across Europe from Italy to Germany into recession.
90% of the top 1,000 companies in the US rely on China for the supply of vital components – that is the staggering reliance of world capitalism on the Chinese Stalinists’ One Nation-Two Social Systems policy, which encouraged international capitalism to exploit China’s workers to produce super-profits for the bosses and shareholders.
With a pandemic erupting across the world an economic and social international crisis of gigantic proportions is rapidly emerging.
In this situation it is glaringly obvious that capitalism has no answer to this catastrophe except to try and safeguard their profits, while undoubtedly the billionaires will be looking to protect themselves behind guarded walls leaving the working class and poor of the world to bear the brunt of economic collapse and deadly disease.
For decades every capitalist country in the world has systematically set out to slash spending on public health in order to satisfy the demands of the bankers and bosses for public money to bail them out of their crisis, and leaving health services completely unprepared for a medical emergency of this magnitude.
The only answer for this devastating crisis is for the working class internationally to take the power through world socialist revolution.
Only by expropriating the bankers and industry, including the pharmaceuticals, can the full resources of the world be utilised to combat this and any future pandemic, and put an end forever to capitalist crises being dumped on the backs of workers and people of the world.