“The pandemic is not over nowhere until it is over everywhere”

The International Monetary Fund has revised downward the growth forecast for 2021 to 5.9%, from 6% in July.

IMF Chief Economist Gita Gopinath.

IMF Chief Economist Gita Gopinath.

“The pandemic is not over nowhere until it is over everywhere.” The chief economist of the International Monetary Fund Gita Gopinath warned Tuesday: The uneven vaccination around the world continues to be a drag on the full recovery of the global economy.

The IMF is now counting on an increase in global GDP of 5.9% this year against 6% in July. The downward revision is “marginal,” notes Gita Gopinath. “However, it masks major revisions for some countries” and “the outlook for low-income countries has darkened considerably,” she adds.

About 58% of the population of advanced economies have been fully vaccinated, against 36% in emerging economies and less than 5% in poor countries, underlines the Washington institution which publishes its forecasts on the occasion of its meetings of fall.

Another challenge is the logistical bottlenecks that have desynchronized global supply chains, leading to blockages at ports, shortages for a range of materials, especially semiconductors, and rising export costs. .

In the United States in particular, manufacturers are struggling to increase their production rate. As a result, the IMF lowered the 2021 growth forecast for the world’s largest economy to 6%, from 7% in July. But it revised it up for 2022, to 5.2%, taking into account the pharaonic spending projects planned by the Biden administration, of several trillions of dollars.

Conversely, the Fund revised its 2021 growth forecast for the euro zone upwards (+0.4 points to 5%). But there again, the disparities are large with an increase in its growth estimate for France which has accelerated the vaccination of its population (+0.5 point to 6.3%) and a decrease for that of Germany which suffers the shortage of semiconductors (-0.5 points to 3.1%).

China, the second largest economic power in the world from which the pandemic started at the end of 2019, will continue to drive global growth (+ 8%, or -0.1 point) alongside the United States and India (+9 , 5%, unchanged). For the Latin America and Caribbean region, which has been hard hit by the pandemic, forecasts are improving (+0.5 points to 6.3%) after a severe recession (-7% compared to -3.1% at worldwide) recorded in 2020.

For 2022, the IMF expects global growth to remain unchanged at 4.9%. All these forecasts, however, remain very uncertain, acknowledges Gita Gopinath, recalling that they are based in particular on a vaccination target of 40% of the world population by the end of this year and 70% by mid-2022. .

“Dangerous divergence”

“If the impact of Covid were to last over the medium term, global GDP could be reduced by a total of 5,300 billion dollars over the next five years compared to current forecasts” of the institution, she explained. For the chief economist, the greatest concern is “the dangerous divergence” in economic prospects between countries. The GDP of advanced economies should thus return to its pre-pandemic trajectory in 2022 and exceed it by 0.9% in 2024. On the other hand, that of emerging markets and developing economies (excluding China) should remain 5.5%. below the pre-pandemic forecast in 2024.

This will lead to “a significant decline in the improvement of the standard of living” of these populations. In addition, “food prices have increased the most in low-income countries where food insecurity is the most acute, increasing the burden on the poorest households and increasing the risk of social unrest”, underlines Gita Gopinath. However, the IMF estimates that inflation will return to pre-pandemic levels by the middle of next year, in both advanced and emerging economies. For the institution, the absolute priority remains the control of the pandemic. “The global community must redouble its efforts to ensure access to vaccines for each country, overcome vaccine hesitation where there is the necessary supply,” concludes Gita Gopinath.

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