IMF's Zhang Tao says domestic demand is the key to economic recovery

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The devastating COVID-19 crisis continues to rage across the globe, which disrupted social and economic order. In its latest World Economic Outlook (WEO) report, the International Monetary Fund (IMF) forecasts that the global economy is expected to contract sharply by 3 percent this year, the worst recession since the Great Depression in the 1930s.

In an exclusive interview with CGTN's Tian Wei, Zhang Tao, Deputy Managing Director of IMF, reiterated the organization's commitment to lend out one trillion dollars to help countries overcome their economic challenges. "We are currently processing anywhere between 30 to 50 countries. That is our target for these days."

The loan can help countries that are in urgent need to balance payments. However, Zhang stressed that the 1-trillion-dollar loan provided by the IMF, which has 189 member countries, can only be a small part of the solution. By leveraging its resources, the goal is for international institutions such as the IMF, the World Bank, and the WHO to mobilize private sectors to join efforts together.

China was the first to battle the novel coronavirus outbreak, impose lockdowns and social distancing rules in late January, and it is also one of the first to open back up, according to Zhang Tao. What happens in China offers an outlook for other countries that are on the paths to recovery. The recent Labor Day holiday in China from May 1st to 5th saw more than 100 million domestic tourist trips.

"It has very much encouraged the rest of the world to see the light at the end of the tunnel," said Zhang of China's return to normalcy.

Zhang Tao noted that the challenges for China and Asia, in general, are how interlinked the economies have become over the past two decades. The fall in outside demand poses a huge challenge and restraint to recovering countries, and the solution is to create domestic demand. "So what we are saying is that you cannot recover on your own, you probably have to recover as a whole," said Zhang. Since the outbreak of the epidemic, China has rolled out a slew of tax and fee relief measures to alleviate the burdens of market entities, especially small firms and self-employed businesses. China's top tax watchdog said on Wednesday that the country's preferential tax and fee measures unveiled in 2020 to support economic development and the containment of the COVID-19 epidemic saved a total of 318.2 billion yuan (about 45 billion U.S. dollars) in the first quarter of the year.

"What we are seeing right now is the liquidities in the market and financial institutions are adequate, and support is well targeted to the most vulnerable, including the SMEs," said Zhang Tao, Deputy Managing Director of IMF, of China's fiscal policies. He pointed out that going forward, it is important for China to remain vigilant and respond to changes as the pandemic remains highly uncertain in many countries.

On May 4th, the World Health Organization said that a total of 7.4 billion euros (8.07 billion U.S. dollars) had been pledged for enhancing the research and development for COVID-19 vaccines, diagnostics, and therapeutic treatment, in an event hosted by the European Commission. China applauded the campaign and said it continues to uphold its support for WHO and global cooperation on fighting the pandemic.

On the state of multilateralism, Zhang Tao said: "at this moment, it is particularly important to safeguard the global supply chains from disorderly disruptions, particularly in the areas of the medical supplies and the scientific research in terms of the developing the vaccines and drugs for the coronavirus."

World Insight with Tian Wei is an international debate/in-depth interview program facilitated by host Tian Wei. People in the know, be they global leaders or emerging change-makers, all provide their insights on this unique global platform.

Schedule: Monday-Saturday

Time (GMT): 1415, 2015

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