[Quest:] Good evening to you. Investors are cheering lawmakers on towards an agreement on a stimulus package. According to the top negotiators, a deal will be done and it is only hours not days away. And as a result, if you look at the market, you're seeing exactly that, and it's the second best point gain in history, all measured against a variety of pluses, of course over the week and dire health warnings. What's interesting about this rally is that it started in the morning, and it hasn't I mean, the market opened higher and it hasn't looked back. Julia is with me. They are obviously getting what they want, having had the Fed yesterday, it gives them what they want. But will it be enough?
[Julia Chatterley, Cnn Business Anchor, First Move:] It's a great question, Richard, and it depends how they use it. Remember, we're talking about a $2 trillion stimulus package. You and I have been debating back and forth. If we look at some of the programs being done around the world, that notional amount is just not big enough, particularly if you talk about shutting down the U.S. economy, a $20 trillion plus economy for two to three months. However, the suggestion is that they could be quite clever with some of the lending programs. They could leverage them, i.e. borrow against the pot of money. Then you could be seeing a gigantic lending program, and then we could be seeing something bigger. So it's going to be very interesting to see the details as always, of this program if and when they agree it.
[Quest:] Julia, thank you. We will watch that as we head towards the close. We are just 30 minutes now away from it. I appreciate it. Thank you. Now, widespread lockdowns in Europe are taking a heavy economic toll. The Composite PMI is a measure of business activity has crashed to 31.4, the lowest reading since the index began. The PMI is always a difficult number, to begin with, but not that bad leaves in no one in any doubt. IHS says the collapse is worse than during the financial crisis. Gita Gopinath is the Chief Economist at the IMF. She joins me now. Good to see you, Gita. As always, thank you. That number, that PMI number, I mean, it's always a bit of an unreliable one. But it's the first bit of hard evidence if you like, economic data of an important nature that we're getting that shows how bad this will be.
[Gita Gopinath, Chief Economist, Imf:] Richard, I think the first bit of bad data that we got was in China, where we saw what happened to industrial production and retail and sales. What we're seeing in terms of PMI is coming out more recently are in line with those. That's, I think, what we would expect when the global economy goes into shutdown in different parts of the world, and that's what we are seeing. So, these are very large effects, historically, lows in terms of impact on services sector. And this is what the reason why, you know, it's quite clear that the global economy is going towards growth below zero in 2020.
[Quest:] The IMF yesterday's statement following the Feynman's G20 was quite clear, the managing director. This is worse this slowdown and what the consequences will be worse than the great financial crisis.
[Gopinath:] The, you know, like I said, we are talking about growth in the negative territory, it could absolutely be worse than the global financial crises. We at this point, we are only seeing the start of the epidemic in several emerging markets and developing economies in low-income countries. So, this is we are at the start of what it looks like a period, at least a few months, where we are going to see these kinds of really dramatic collapses in activity taking place in different parts of the world. Now, if these containment measures work, and we see, you know, some, you know, holding back of the number of cases, and if there are advances in the medical side, that provide more effective treatments, that mind with what is a very extensive set of measures being put in both in monetary policy and fiscal policy around the world, and what is even being anticipated at this point coming out to the U.S., those should lead to a recovery in 2021.
[Quest:] On that point because it's a crucial one, is there a I mean, there is a difference, isn't there and to some extent, between an economy that is artificially brought to a close, and an economy, which slows down and goes into recession, through cyclical forces, now it will feel the same. I'm not trying to suggest that one is better than the other, but at least with the with the first one, you are able to restart it. And I mean, there'll be a huge amount of damage thereafter, but you can at least restart the economy.
[Gopinath:] Well, we certainly in this case, know exactly why these numbers are coming in as badly as they are. It is because countries are choosing appropriately to put in containment measures to have social distancing, and to basically stop people from going to work. And so, this is what you would expect to see. So in that sense, yes, we know what it would take to improve things. Once we do one once we have a better handle of what's happening with this with the virus and its spread.
[Quest:] The measures that you've seen and heard about so far, whether it's the 2 trillion from the Fed, whether it's the Bank of England, the Treasury, the ECB, all of them, and are you encouraged you're encouraged, obviously, that they're doing it. But do you do you sort of warn that more will be required?
[Gopinath:] They're taking some very large measures, and if you look at what the U.S. Fed has done recently, this is you know, especially compared to the global financial crisis, they've moved much more faster, and the measures are much more, you know, are much larger. So, these are big measures what we're seeing in the Euro area, what we're seeing in many other countries in the world, it is the case. I think what we need to think about now is the rest of the emerging market and developing world and the low-income world, where the fiscal space they have is not the same as what it is in advanced economies and similarly with the monetary measures that they can put in place. So, for them, I think there will there will be a need for the international community to play a much bigger role.
[Quest:] Good to see you. Thank you, Gita. I appreciate you joining us and bringing us up to date. Thank you.
[Gopinath:] Bye, Richard.
[Quest:] While we were while we were talking there, the market did go up. We're now over 10 percent up on the day, which is the best of the day so far, 25 minutes to go. And if you thought there might be selling going on towards the close, it's quite the opposite. As the Senate closes in on a stimulus deal, airlines around the world are warning, they stand to lose $250 billion. The head of AITA is with me, next.