The International Monetary Fund (IMF) warned this Tuesday (12) that the persistence of the covid-19 pandemic and the unequal distribution of vaccines continue to slow down the global economic recovery and worsen the prospects for developing countries, including those of Latin America.
Global growth for 2021 is projected at 5.9%, against 6% estimated in July, a “marginal” decline, explained the IMF in its update of the quarterly report “World Economic Outlook” (WEO).
But these numbers mask major setbacks in some nations, warned Gita Gopinath, chief economist at the IMF, noting that “the outlook for the group of low-income developing countries has deteriorated considerably due to the worsening dynamics of the pandemic.”
Added to the wave of delta variant coronavirus infections is a markedly lower vaccination rate in developing countries.
About 58% of the population of advanced economies is already fully immunized, against 36% in emerging economies and less than 5% in poor countries, underlines the IMF, which publishes its forecasts in the framework of annual meetings with the World Bank this week in Washington.
Another global challenge is the logistical bottlenecks that have left global supply chains out of sync, leading to port blockages, shortages of a variety of products and rising export costs.
– Reduction for USA, Brazil and Mexico –
As a result, the IMF lowered its 2021 growth forecast for the world’s largest economy – to 6% from 7% in July. But it revised upwards for 2022, at 5.2%, taking into account the spending projects planned by the Joe Biden administration of several trillion dollars.
In contrast, the Fund revised its growth forecast for 2021 in the Eurozone upwards (+0.4 points to 5%).
In this case, again, the disparities are large, with an increase in its growth estimate for France (+0.5 points, to 6.3%), thanks to the acceleration of the vaccination of its population, and a reduction for Germany, which suffers from the scarcity of semiconductors (-0.5 point, to 3.1%).
China, the world’s second economic power and where the pandemic began in late 2019, will continue to drive global growth (-0.1 point to 8%) along with the United States and India (9.5%, unchanged), he said. the IMF.
For Latin America and the Caribbean, a region heavily affected by the pandemic, the Fund improved its growth forecast for this year (+0.5 points, to 6.3%), after a strong recession registered in 2020 (-7% against -3.1% worldwide).
But he reduced the projection for Brazil and Mexico, the two main economies in the region, estimating a GDP expansion of 5.2% and 6.2%, respectively, in both cases 0.1 percentage point less than the previously provided.
For 2022, the IMF maintained its global growth estimate at 4.9%.
All these predictions, however, remain very uncertain, said Gopinath, noting that they are based, in particular, on a vaccination target of 40% of the world’s population by the end of this year and 70% for the first half of 2022.
– “Dangerous divergence” –
For Gopinath, it is very clear that “the pandemic will not end in one place until it ends everywhere”.
A prolonged recession “could reduce world GDP by $5.3 trillion accumulated over the next five years,” he warned.
For the chief economist at the IMF, the biggest concern is the “dangerous divergence” in economic prospects between countries.
The GDP of advanced economies is expected to return to its pre-pandemic trajectory in 2022.
But the GDP of emerging markets and developing economies (excluding China) is expected to remain 5.5% below pre-pandemic projections in 2024, leading to “a significant reduction in the improvement in the standard of living” for these populations.
Furthermore, “food prices have increased the most in low-income countries, where food insecurity is most acute, burdening the poorest families and increasing the risk of social unrest,” noted Gopinath.
Still, 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 world community must redouble its efforts to ensure equitable access to vaccines for all countries, overcome doubts about vaccines when there is an adequate supply, and ensure better economic prospects for all,” concluded Gopinath.
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