Saturday, 22 January, 2022

Corona to slow pace of global economic recovery: IMF

WASHINGTON: The latest surge of Covid-19 infections will slow the pace of the global economic recovery, the International Monetary Fund’s Managing Director Kristalina Georgieva said in her first media interview this year.

Last October, the Washington-based lender predicted global output growth of 4.9 per cent this year, but the world economy which was rebounding in the last quarter of 2021 will slow as a result of soaring Covid-19 cases that are crimping growth in the largest economies, Ms Georgieva said, in an exclusive interview with The National. The estimate will be revised downwards to reflect this, she said, report agencies.

“We were hoping to have more momentum in the recovery in 2022, already in the last month of the previous year we have seen this momentum weakening, because the two big engines of growth of the world economy, the US and China, were slowing down, and then we got hit by Omicron”, Ms Georgieva explained.

“There is no doubt that this is going to add to economic disruptions, and it would add to uncertainty. We are currently calculating the exact impact … but I can say already that unfortunately vis-à-vis our latest outlook in October, there would be downgrades.”

IMF economists meet every three months and update their growth estimates, which will be released in the fund’s World Economic Outlook later this month.

The world will have to adapt to a “shock-prone world”, in addition to ensuring greater global co-operation, said Ms Georgieva, who is a proponent of working collaboratively.

Despite the dent to growth, the IMF chief said there is much to be optimistic about.

“We have learned how to function with the pandemic still around us, we have deployed our scientists to provide protections for our people, we are now more effective with each wave that comes and the restrictions it causes are milder”.

While Ms Georgieva was optimistic that the impact of the virus will be less severe, she said there are other concerns and “uncertainty”.

The IMF’s priorities for 2022 include helping people and countries deal with the fallout from the pandemic for a third year, Ms Georgieva said.

“We are stepping into 2022 having already used a great deal of our capacity to protect people and our economy”, she said, adding that the recovery is quite uneven, with different countries in different positions.

Ms Georgieva explained: “2020 was tough but from a policy standpoint it was somewhat easier, we had universal recommendations, monetary policy accommodation, fiscal policy support to protect the most vulnerable”.