Wednesday, December 1

IMF clouds global recovery due to inflation, bottlenecks and unequal access to vaccines | Economy


A guard places a fence in front of the compound where the meeting of the IMF and the World Bank is being held, this Monday in Washington.
A guard places a fence in front of the compound where the meeting of the IMF and the World Bank is being held, this Monday in Washington.ALEX WONG (AFP)

The coronavirus has accentuated global inequality and uneven access to vaccines, widening the recovery gap between the rich world and developing countries. No country will be able to overcome the pandemic alone, especially with the highly contagious, still rampant delta variant, which is why interdependence and collaboration between advanced and emerging economies is the only safe scenario for, as a roadmap, to leave behind the health crisis, which converges with another of unknown scope, the climatic one and its multiple consequences, including food insecurity.

The impact of successive virus outbreaks – especially the current delta wave – on critical links in global supply chains has caused more severe-than-expected disruptions, fueling inflation in many countries and casting shadows on the recovery. These are the main conclusions of the report Global Economic Outlook of the International Monetary Fund (IMF), meeting in its autumn session with the World Bank, which was presented this Tuesday in Washington. The global economy is entering a phase of inflationary risk, the Fund has warned, warning central banks to be extra vigilant and tighten monetary policy if price pressure persists, although it is expected to ease in most countries. countries in 2022.

The global growth forecast has been adjusted to the minimum for 2021, going from the 6% forecast last July to 5.9%. In the US, the correction has been one point, from 7% to 6% this year, compared to soaring economies such as India, with a forecast of 9.5%, or China, 8%. Low- and middle-income countries lag far behind in regaining the expansion path they had before the pandemic. For 2022, the global growth forecast does not change: 4.9%. But it is the divergence between the two large blocs that is the main concern of the experts: while the group of strong economies is expected to recover its previous trajectory next year, and surpass it by almost one point (0.9%) in 2024 , emerging and developing markets, with the exception of China, will remain 5.5% below the pre-pandemic trend in 2024, which will cause a sharp slowdown in the improvement of their living conditions. Combining this setback with the IMF’s recommendation to invest mostly in healthcare to overcome the emergency is a difficult recipe to apply for caboose economies.

The deep gap between the two economic realities – or a world at two speeds – is the result of what experts call the great vaccine divide and the disparity in the stimulus policies implemented to keep the economy alive during the health emergency. The figures are eloquent: while at least 60% of the population has received the full immunization schedule in countries with advanced economies, part of it has already been given a booster dose (in the US and Israel, among others). ), about 96% of citizens in low-income countries have not yet received a puncture. Many emerging markets, for their part, are putting their stimulus plans on hold due to stricter financing conditions.

As IMF chief economist Gita Gopinath writes in the introduction to the report, recovery from the pandemic is a tale of two worlds, in which advanced economies are the only ones to return to their pre-pandemic levels next year. Meanwhile, the global trend shows a decline of 2.3% compared to previous levels, although emerging and developing markets, with the exception of China (2.1% below), show a negative figure of 5, 5%, and the lowest income countries almost 7% lower.

The shortage of components such as semiconductors, which is hitting production chains in sectors such as the automotive industry, together with the rebound in prices of raw materials, has caused a rapid increase in inflation in the US, Germany and many emerging countries. and developing. The theory that it is a temporary overheating, as a mere rebound effect after the economic contraction of the pandemic, has as many supporters as detractors. But the rise in food prices has been especially noticeable in the lower-income countries, which are precisely the most exposed to food insecurity, which compromises the economic viability of households and carries the risk of one of the countless bread scramble like those that periodically agitate many impoverished countries.

Public debt at highs

Given that no country – not even the richest – will be able to emerge from the pandemic on its own, the report emphasizes, vaccine solidarity is imposed to achieve the goal of immunizing at least 40% of the world’s population by the end of this year , and 70% by mid-2022. This implies the donation of vials by the rich world to the global Covax fund, but also a more fluid coordination with manufacturers to prioritize short-term supply to the UN-led platform, as well as the elimination of commercial restrictions on the circulation of vaccines (patents and tariffs). In addition, the developed world must contribute to closing the financing gap of 20,000 million dollars (17,300 million euros) for diagnostic tests, therapies and research. This is also equivalent to encouraging the production of vaccines in developing countries through financial and technological transfer. The great vaccination gap, either due to the failure in the distribution and distribution of vaccines and due to doubts about their efficacy -still very perceptible in countries like the United States-, could reduce the accumulated global GDP by 5.3 trillion dollars (4 , 5 billion euros) in five years.

The IMF report also directs a clear message to the upcoming global climate summit (COP26), to be held in November in Glasgow. The institution urges a greater commitment to reduce the emission of greenhouse gases, for which it proposes measures such as a base price of coal adjusted to the characteristics of the country – China and India are currently experiencing the consequences of the free price – and investment. of the Administrations in green energies. And another message to the advanced economies: to fulfill their promises to finance with 100,000 million dollars (87,000 million euros) annually the reconversion or energy transition of the laggards.

With regard to public debt, at highs after a year and a half of support and support for economies drained by the pandemic, the institution chaired by Georgieva proposes medium-term solutions to make it sustainable and cites the example of the injection of reserves for 650,000 million dollars (560 billion euros), realized through special drawing rights (SDR), essential for low- and middle-income countries. Again, the situation in low-income countries is the most worrying: debt soared 12% to a record 860,000 million dollars (750,000 million euros) last year, according to a World Bank report released Monday .

Addressing this problem is urgent, recalled David Malpass, president of the World Bank, since at the end of the year the Debt Service Suspension Initiative (DSSI), launched by the G-20 in April 2020, expires, allowing Governments defer debt payments to focus on fighting the pandemic. “The risk that many of them will emerge from the pandemic with an over-indebtedness that would take years to manage is obvious,” Malpass warned.


elpais.com

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