Monday, 29 November, 2021

Inequality, inflation hurting pandemic recovery: IMF

WASHINGTON: The global economic bounceback from the Covid-19 crisis will downshift this year as countries struggle with rising prices, high debt loads and divergent recoveries in which poor nations are slipping behind wealthier ones, the leader of the IMF warned on Tuesday.

While the Washington-based crisis lender has hundreds of billions of dollars in new firepower to help countries recover from the catastrophe, IMF Managing Director Kristalina Georgieva said factors from rising food prices to unequal vaccine access were taking a toll, reports AFP.

“We face a global recovery that remains ‘hobbled’ by the pandemic and its impact. We are unable to walk forward properly,” Georgieva said in a speech delivered virtually from Washington to Bocconi University in Milan.

The IMF will release new growth forecasts next week, but Georgieva warned “we now expect growth to moderate slightly this year” from the six percent forecast in July, and “the risks and obstacles to a balanced global recovery have become even more pronounced.”

These include a widening divergence between rich countries and poor countries in the trajectories of their recovery from the pandemic.

“Economic output in advanced economies is projected to return to pre-pandemic trends by 2022. But most emerging and developing countries will take many more years to recover,” Georgieva said.

“This delayed recovery will make it even more difficult to avoid long-term economic scarring—including from job losses, which hit young people, women and informal workers especially hard.”

Georgieva’s speech comes ahead of the fall meetings of the IMF and World Bank, where the former will unveil its latest World Economic Outlook offering forecasts on an array of topics.

Since their previous report in July, the IMF’s tool kit for dealing with global crises was greatly expanded with a $650 billion increase in cash reserves for member nations known as Special Drawing Rights.

These reserves, $275 billion of which went to emerging and developing nations, give countries funds to draw on as their economies recover. In her speech, Georgieva calls on countries that don’t need them to channel them into the fund’s anti-poverty programs.

Georgieva likened the global recovery from the pandemic to “walking with stones in our shoes” and said it could get off track.