WASHINGTON: The International Monetary Fund (IMF) expects global economic growth in 2021 to be slightly below its July forecast of 6%, IMF chief Kristalina Georgieva said on Tuesday, citing risks associated with debt, inflation and varying economic trends. Giving said. covid 19 pandemic.
Georgieva said the global economy was bouncing back, but the pandemic continued to limit recovery, the main obstacle posed by the “Great Vaccination Divide”, which has left many countries with little access to COVID vaccines. .
In a virtual speech at the University of Bocconi in Italy, Georgieva said next week’s Updated World Economic Outlook forecasts that advanced economies will return to pre-pandemic levels of economic output by 2022, but most emerging and developing countries are expected to recover. That would require “many more years”. .
“We are facing a global recovery that remains ‘hobby’ from the pandemic and its effects. We are unable to move properly – it’s like walking with stones in our shoes,” she said.
The United States and China remain important engines of growth, and Italy and Europe have grown, but growth is deteriorating elsewhere, Georgieva said.
Inflation pressures, a key risk factor, were expected to ease in most countries in 2022 but will continue to affect some emerging and developing economies, it warned, warning that continued increases in inflation expectations could lead to a sharp rise in interest rates. and has strict financial terms.
He added that although central banks can generally avoid tightening for now, they should be prepared to act quickly if recoveries strengthen faster than expected or there is a risk of rising inflation.
It is also important to monitor financial risks, including extended asset valuations, he added.
Georgieva said the global debt level, which is now nearly 100% of world GDP, means that many developing countries have very limited ability to issue new debt under favorable conditions.
Georgieva said it is important that debt restructuring efforts already initiated by Zambia, Chad and Ethiopia successfully end in order to encourage others to seek help.
Responding to a query from a participant, he said that better transparency about loans, sound debt management practices and expanded regulatory framework will help ensure increased private sector participation.
Asked about the rising debt levels in Europe, Georgieva said that the rising economic momentum has put Europe in a strong position to avoid another sovereign debt crisis, as in the wake of the global financial crisis of 2007–08. Later came in front of Greece.
But she said countries will have to carefully plan how to shift course for medium-term fiscal consolidation to wipe out the heightened pandemic-related debt burden.
“The bills are going to be due,” he said, adding that good planning was needed to reduce the debt burden over time to avoid “brutal” cuts in education or health care funding.
accelerate vaccine delivery
Georgieva urged rich countries to increase the delivery of COVID-19 vaccines to developing countries, remove trade restrictions and close the $20 billion gap in funding needed for COVID-19 testing, tracing and therapeutics.
Failure to close the huge gap in vaccination rates between advanced economies and poor countries could halt global recovery, driving cumulative global GDP A loss of $5.3 trillion over the next five years, she said.
Georgieva said countries should accelerate efforts to address climate change, ensure technological change and promote inclusion – all of which can also spur economic growth.
He said the shift to renewable energy, new power networks, energy efficiency and low-carbon mobility could increase global GDP by about 2% this decade, creating 30 million new jobs.
Georgieva said the global economy was bouncing back, but the pandemic continued to limit recovery, the main obstacle posed by the “Great Vaccination Divide”, which has left many countries with little access to COVID vaccines. .
In a virtual speech at the University of Bocconi in Italy, Georgieva said next week’s Updated World Economic Outlook forecasts that advanced economies will return to pre-pandemic levels of economic output by 2022, but most emerging and developing countries are expected to recover. That would require “many more years”. .
“We are facing a global recovery that remains ‘hobby’ from the pandemic and its effects. We are unable to move properly – it’s like walking with stones in our shoes,” she said.
The United States and China remain important engines of growth, and Italy and Europe have grown, but growth is deteriorating elsewhere, Georgieva said.
Inflation pressures, a key risk factor, were expected to ease in most countries in 2022 but will continue to affect some emerging and developing economies, it warned, warning that continued increases in inflation expectations could lead to a sharp rise in interest rates. and has strict financial terms.
He added that although central banks can generally avoid tightening for now, they should be prepared to act quickly if recoveries strengthen faster than expected or there is a risk of rising inflation.
It is also important to monitor financial risks, including extended asset valuations, he added.
Georgieva said the global debt level, which is now nearly 100% of world GDP, means that many developing countries have very limited ability to issue new debt under favorable conditions.
Georgieva said it is important that debt restructuring efforts already initiated by Zambia, Chad and Ethiopia successfully end in order to encourage others to seek help.
Responding to a query from a participant, he said that better transparency about loans, sound debt management practices and expanded regulatory framework will help ensure increased private sector participation.
Asked about the rising debt levels in Europe, Georgieva said that the rising economic momentum has put Europe in a strong position to avoid another sovereign debt crisis, as in the wake of the global financial crisis of 2007–08. Later came in front of Greece.
But she said countries will have to carefully plan how to shift course for medium-term fiscal consolidation to wipe out the heightened pandemic-related debt burden.
“The bills are going to be due,” he said, adding that good planning was needed to reduce the debt burden over time to avoid “brutal” cuts in education or health care funding.
accelerate vaccine delivery
Georgieva urged rich countries to increase the delivery of COVID-19 vaccines to developing countries, remove trade restrictions and close the $20 billion gap in funding needed for COVID-19 testing, tracing and therapeutics.
Failure to close the huge gap in vaccination rates between advanced economies and poor countries could halt global recovery, driving cumulative global GDP A loss of $5.3 trillion over the next five years, she said.
Georgieva said countries should accelerate efforts to address climate change, ensure technological change and promote inclusion – all of which can also spur economic growth.
He said the shift to renewable energy, new power networks, energy efficiency and low-carbon mobility could increase global GDP by about 2% this decade, creating 30 million new jobs.
.