The managing director of the International Monetary Fund warned before this week’s virtual Group of 20 (G20) summit that even though vaccine breakthroughs offer hope, the efforts of staging a recovery for the global economy from the hit of the novel coronavirus pandemic seems to be losing steam and “the economic path ahead remains difficult and prone to setbacks”.
IMF’s managing director, Kristalina Georgieva, wrote in an IMFBlog post that to keep the pandemic from leaving indelible economic scars, there must be strong and concerted policy action by governments in response to the continuing economic and public health uncertainty brought about by the Covid-19 pandemic.
A deep scar on the global economy because of the pandemic is already evident. Accoridngot predictions of the IMF, there will be a contraction of 4.4 per cent in global GDP in 2020 while the next year will see a modest growth of 5.2 per cent as economies will experience a “partial and uneven recovery”.
Bit for developing countries, the forecast has worsened and it is being expected that the economic impact of Covid-19 will leave the global GDP lower by more than 6 percentage points in 2021 compared to the pre-pandemic forecasts for the year.
There are three priority areas that cooperation will be needed among IMF member states, Georgieva said. Countries need to work together to bring an end to the pandemic, developing an economic bridge to stage a recovery and create a framework to ensure a more just and inclusive global economy in the coming decade.
190 countries are members in the IMF and the focus of the organization is to create global monetary and trade policies and poverty reduction.
Georgieva wrote that public spending on treatment, testing and contact tracing for Covid-19 needs to be increased by governments as well as remove restrictions and barriers to trade of medical goods and services and enhance “multilateral efforts on the manufacturing, purchase and distribution” of vaccines, treatments and tests, particularly for low-income countries.
Countrie3s were also urged by the IMF’s managing director to refocus on spending and support to workers and businesses nit hard by the pandemic, and such measures should include “cash transfers to households, job retention support, and augmented unemployment benefits”, as many of such measures implemented previously have either expired or are on the verge of coming to an end by this year.
Georgieva also said that it is crucial to make investments in infrastructure aimed at addressing climate goals and added that countries would be able to save money over time and almost double the boost to global GDP through a multilateral approach to tackle the issues.
She argued that there will be just under 1.2 per cent in global GDP growth by 2025 by an “unsynchronised approach” compared to an estimated 2 per cent growth if countries worked together to tackle the issues.
(Adapted from AlJazeera.com)