IMF worried about mistake in global economic recovery

IMF worried about mistake in global economic recovery

Optimism has waned a bit. In its forecasts published on Tuesday, October 12, the International Monetary Fund (IMF) expects global growth to be 5.9% in 2021 (an increase of 6% in July), then 4.9% in 2022. In a few months, the horizon is “Cloud” In low-income countries, due to the spread of the delta version of COVID-19. and recovery from supply chain disruptions “more difficult” in advanced economies. Growth forecasts are revised upwards only in commodity-exporting countries, which are benefiting from the rise in prices.

The pace of global recovery makes the IMF less concerned about the growing gap between countries. In 2024, the gross domestic product (GDP) of advanced economies will be 0.9% above pre-pandemic levels, while it will be 5.5% lower in the group of emerging countries (excluding China). The crisis ended the hold of emerging countries for at least some years and pushed low-income countries to a standstill. Since July, the biggest drop in growth has been recorded (- 0.6%), and between 65 million and 75 million of their residents are expected to fall into extreme poverty this year.

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This great divergence is first explained by double-speed vaccination campaigns: 60% of residents in rich countries are vaccinated, while only 5% in poor countries, which delays their remission and their resumption. The slow pace of vaccination also threatens the global economy, and the IMF calls for it to accelerate: “It will save lives , It will reduce the risk of new forms appearing and add trillions of dollars to economic recovery. ,

Fundraising ability varies by country

According to the institution’s calculations, rich countries could deliver 1 billion doses without compromising their vaccination goals, and it would only take $50 billion (43.3 billion euros) more to vaccinate 40% of each country’s population by the end of 2021 . and 70% by the middle of 2022. Poor countries will have to spend $200 billion to fight the pandemic and $250 billion to revive their economies.

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A second factor in divergence and inequalities is the ability to raise funds to support and revive economies. “Many emerging and developing countries, facing more restrictive financial conditions and inflationary risks, stop supporting their economies, although activity has not returned to normal” Underlines Gita Gopinath, chief economist of the IMF. This year, the Washington-based institution added $650 billion to its reserves through the largest special drawing rights (SDR) issue in its history. A breath of fresh air that benefits all Fund member countries in proportion to their quotas.

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