Encouraging signs of global recovery are evident, but significant risks remain. This is according to Geoffrey Okamoto, first deputy managing director of the International Monetary Fund.
In an address to the China Development Forum, Mr Okamoto said that the IMF would shortly be updating its forecast annual growth. Additional fiscal stimulus in the United States would likely boost growth from the 5.5% which the IMF had predicted in January.
He warned, however, the recovery was ‘incomplete and unequal’. ‘It is incomplete,’ he said, ‘because despite a stronger than expected recovery in the second half of 2020, GDP remains well below pre-pandemic trends in most countries. The recovery paths have also been different across countries, as well as across sectors.’
He said that China had largely recovered, but that there was a growing gap between the recovery trajectories of developed and emerging economies. In emerging markets, Mr Okamoto said, income per capita would be some 22% lower between 2020 and 2022 than would have been the case without the pandemic.
Access to vaccines was uneven across the world and within countries; some poorer countries would not see significant vaccination until 2022. ‘This pandemic will only really be over when it is over for everyone,’ Mr Okamoto said.
There was the risk of resistant mutation, which would counter the impact of vaccine rollouts.
He added that ‘there are also uncertainties about the effectiveness of policy actions and differences in what countries can do.’
Mr Okamoto said that the crisis ‘could leave deep scars’. Earlier recessions had seen developed economies’ outputs reduced by around 5% after five years, relative to pre-recession trends. Countries unable to afford a strong response would likely be hit even harder.