The global economics bounceback from the COVID-19 crisis will downshift this year as countries struggle with rising prices, high debt loads and divergent recoveries in which poor nations are slipping behind wealthier ones, the leader of the IMF warned on Tuesday.
While the Washington-based crisis lender has hundreds of billions of dollars in new firepower to help countries recover from catastrophe, IMF Managing Director Kristalina Georgieva said factors from rising food prices to unequal vaccine access were taking a toll.
“We face a global recovery that remains ‘hobbled’ by the pandemic and its impact. We are unable to walk forward properly,” Georgieve said in a speech delivered virtually from Washington to Bocconi University in Milan.
The IMF will release new growth forecasts next week, but Georgieve warned “we now expect growth to moderate slightly this year” from 6% forecast in July, and “the risks and obstacles to a balanced global recovery have become even more pronounced.”
These include a widening divergence between the rich and the poor countries in the trajectories of their recovery from COVID-19.Economic output in advanced economies is projected to return to pre-pandemic trends by 2022.But most emerging and developing countries will take many more years to recover,” Georgieve said. “This delayed recovery will make it even more difficult to avoid long term economic scarring-including from job losses, which hit young people, women and informal workers especially hard.”
Georgieve’s speech comes a head of the fall meetings of the IMF and World Bank(WB),where the former will unveil its latest World Economic Outlook offering forecasts on an array of topics. Since their previous report in July, the IMF’s tool kit for dealing with global crises was greatly expanded with a $650 billion increase in cash reserves for member nations known as Special Drawing Rights.