The International Monetary Fund called on governments worldwide Monday to join forces and roll out aggressive financial supports for the coronavirus-infected global economy, including direct payments to workers and businesses.
But while several countries have taken steps to cushion the blow to their economies and boost confidence, including the United States, there has been little visible coordination among policymakers like there was at the height of the 2008 global financial crisis.
The rising concern about the global economy has been reflected in the continued collapse of global stock markets, with trillions in value wiped out in recent weeks, a rout that continued Monday. Oil prices have also collapsed.
Given the "acute shocks" caused to economies, consumers and businesses, IMF chief economist Gita Gopinath said "policymakers will need to implement substantial targeted fiscal, monetary and financial market measures to help affected households and businesses."
That includes "cash transfers, wage subsidies and tax relief" as well as interest rate cuts and financial market support by central banks.
Given the ties between global economies, "the argument for a coordinated, international response is clear," she said in a blog post.
The IMF already warned that the impact of the COVID-19 outbreak will slow growth in the world economy to below the 2.9 percent posted last year.
IMF chief Kristalina Georgieva said last week the epidemic "is no longer a regional issue, it is a global problem calling for global response."
The virus has shuttered factories, disrupted travel, delayed conferences and sporting events and infected more than 110,000 people worldwide. More than 3,800 people have died.
Gopinath said the impact is seen in production cuts hitting companies across the globe that depend on parts from China, where the outbreak originated, but also will hit consumption, since people are reluctant to go out and spend money.
Some countries already have taken steps, Gopinath noted. Italy, the country hardest hit in Europe, "has extended tax deadlines," and Korea has introduced wage subsidies.
Rome on Monday announced it would lock down the entire country to contain the epidemic as the death toll reached 463.
Italy is preparing a 7.5 billion euro (US$8.6 billion) package aimed at helping out the devastated tourism industry and other sectors especially hard-hit by disruptions in global supply chains.
The US Federal Reserve last week announced an emergency interest rate cut, and on Monday significantly increased its cash injections into money markets with $150 billion a day in short-term loans to ensure ample liquidity amid the virus uncertainty.
That was just what Gopinath called for, saying such moves "can lift confidence and support financial markets." And she noted that "actions by large central banks (are) also generating favorable spillovers for vulnerable countries."
But government spending measures to support economic activity have been slow in coming and economists are warning that rapid action is crucial to have the biggest impact.
Germany announced an investment package worth 3 billion euros a year but it does not kick in until 2021 and is spread over three years.
US President Donald Trump signed a bill with $8 billion in emergency funding, but that largely goes to medical equipment, medication and testing supplies for state and local governments.
According to media reports, White House advisers are preparing a menu of options for Trump that include paid sick leave and emergency help for small businesses.
French President Emmanuel Macron called for European Union leaders to hold a videoconference Tuesday aimed at coordinating their response to the coronavirus outbreak on the continent.
Financial hit exposes weak spots
The IMF's Gopinath said governments can help workers who are laid off by business closures by extending and increasing unemployment insurance, as well as helping those that do not have paid sick leave.
She also warned that the economic concerns can ripple into financial markets, causing borrowing costs to rise. And that in turn will "expose financial vulnerabilities that have accumulated during years of low interest rates, leading to a heightened risk that debt cannot be rolled over."
The IMF and others have been warning for years that high debt levels could become a source of risk if the economy slows.
US banking regulators on Monday urged financial institutions to work with borrowers feeling the impact of the coronavirus outbreak, hinting they will ease up on the rules, a move likely aimed at preventing a rush of bankruptcies or delinquencies.