Governments around the world have spent $10 trillion in fiscal actions to respond to the novel coronavirus pandemic and its economic fallout, but significant further efforts are needed, the head of the International Monetary Fund said on Thursday.

New estimates suggested that up to 100 million people could fall into extreme poverty as a result of the crisis, IMF Managing Director Kristalina Georgieva said, noting this would erase the past three years of gains made in poverty reduction.

The disease has infected nearly 7.4 million people around the world and 415,545 have died. The World Bank this week forecast the coronavirus would shrink global output by 5.2% in 2020, the deepest contraction since World War Two.

The IMF is due to update its forecasts on June 24. Georgieva has said that further cuts are “very likely” to the Fund’s April forecast for a 3% contraction in global output.

To promote a more inclusive recovery, “substantial fiscal stimulus” should focus on minimizing job losses and preventing a rise in inequality, she wrote in a blog on the IMF’s website.

Investments should focus on improving access to health care and education, strengthening climate protections and broadening the access of low-income households and small business to financial products and technology, she wrote. “The COVID-19 crisis is inflicting the most pain on those who are already most vulnerable. This calamity could lead to a significant rise in income inequality,” she said.

Policymakers should act quickly and deliberately to promote a more inclusive recovery, she said, noting that new research by the IMF and World Bank showed that more equitable access was associated with stronger and more sustainable growth.

Moving cash payments by governments into bank accounts using fintech and mobile phones could reduce the number of “unbanked” adults by 100 million globally from around 1.1 billion. And financially inclusive countries had a 2- to 3-percentage point edge in gross domestic product growth, she said. Layoffs caused by the coronavrius pandemic reached 44.2 million in the United States even as businesses try to reopen, with analysts warning of continuing damage to the world’s largest economy.

Wall Street stocks plunged at the start of trading on Thursday, reversing recent gains as traders became spooked by resurgent coronavirus cases in parts of the country and the new Labor Department data showing 1.54 million workers putting in new unemployment benefit claims last week.

Such massive layoffs have become routine since shutdowns to stop the coronavirus from spreading began in mid-March and have been declining since reaching their peak later that month. But the weekly total is still well above any figure seen during the global financial crisis in 2008.

Rubeela Farooqi of High Frequency Economics said the data shows the US economy is clearly not back to normal.

“States and businesses have reopened, but activity remains restricted and subdued, which will likely result in ongoing layoffs over coming weeks,” she said in an analysis.

COVID-19 remains a stubborn threat in the United States, which continues to record around 20,000 new cases every day with few signs of a reduction. States like Texas and North Carolina are seeing more patients hospitalized with the virus than a month ago.

Speaking on CNBC, Treasury Secretary Steven Mnuchin indicated the government wouldn’t waiver from its push to get businesses operating, saying “We can’t shut down the economy again.” That didn’t seem to convince Wall Street traders, who pulled back from the gains made in recent days in which the tech-rich Nasdaq hit a record high and the broad-based S&P 500 erased its losses for the year.

But about 90 minutes after the opening bell, the Nasdaq was 2.5 per cent in the red and the S&P 3.3 per cent, while the benchmark Dow Jones Industrial Average retreated 3.9 per cent.

The Labour Department data did confirm that the waves of layoffs were ebbing, with 355,000 fewer initial claims filed in the week ended June 6 than in the week prior.

About 20.9 million people received unemployment payments in the week ended May 30, down from 21.3 million the week before − indicating that people were either returning to work or had their claims denied, and bringing the insured unemployment rate down 0.2 points to 14.4 per cent.

Also adding to the initial jobless claims filed last week were 705,676 people who applied for benefits under a special programme for contractors and gig economy workers.

All told, the report was in line with May’s unemployment figures, which declined to 13.3 per cent from 14.7 per cent in April as the US economy added 2.5 million jobs, though the Labor Department acknowledged a classification error that would likely put both months’ figure three points higher.

Agencies