Former Reserve Bank of India Governor Raghuram Rajan has said top focus of countries should be on containing spread of coronavirus. The economist said governments could worry about economic stimulus later. "At this point I would say the best thing that governments can do is to really fight the epidemic rather than worry about stimulus measures. That comes later," said Rajan.
The economist said that there's little central banks can do and priority should be to convince companies and households that the virus is under control. He said that more government spending would also help.
"People want to have a sense that there is a limit to the spread of this virus perhaps because of containment measures or because there is hope that some kind of viral solution can be found," Rajan told Bloomberg in an interview.
Raghuram Rajan's comments come amid concerns of slowdown due to the coronavirus spread. The coronavirus epidemic has pushed the world economy towards its worst performance since the financial crisis over a decade ago, said the report.
International Monetary Fund (IMF) has also signalled a downgrade in global growth forecast. The IMF said, "Clearly the virus is going to have an impact on growth." Bank of America Corp economists have also warned clients that they now expect global growth to be at 2.8 per cent - the slowest since 2009.
Rajan said that people have moved from extreme confidence in markets to extreme panic - all within a week. He told Bloomberg in the interview that the virus outbreak will force companies to rethink supply chains and overseas production facilities.
"Globalisation in production is going to be hit quite badly," he said.
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