The International Monetary Fund (IMF) has lowered the global economy by a 0.1 per cent t in 2021 due to the highly transmissible Covid-19 Delta variant and related supply disruptions that caused shortages of key manufacturing inputs.
As the World Bank and IMF annual meetings began in Washington DC October 12, IMF said ‘‘the global economy is projected to grow by 5.9 per cent in 2021 down from earlier projection of 6 per cent in the July 2021 World Economic Outlook (WEO) Update.’’
In her address on the WEO report presented in a news conference, Professor Gita Gopinath who is the IMF Economic Counsellor and Director of Research said the global recovery continues but the momentum has weakened.
“Overall, risks to economic prospects have increased, and policy trade-offs have become
Professor Gita said ‘‘the outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics.’’
She added that the downgrade also reflects more difficult near-term prospects for the advanced economy group in part due to supply disruptions.
Partially offsetting these changes, projections for some commodity exporters have been upgraded on the back of rising commodity prices.
According to IMF, ‘‘Covid-19 pandemic related disruptions to contact-intensive sectors have caused the labor market recovery to significantly in most countries.’’
In regards to the Covid-19 vaccine, the IMF said in the WEO report that vaccine access remains the principal driver of fault lines in the global recovery.
“Many advanced economies have seen remarkable progress in vaccinations since the April 2021 WEO. By contrast, most emerging market and developing economies have had a much slower rollout, hampered by lack of supply and export restrictions,” the IMF echoed.
The IMF said advanced economies have achieved broad availability of vaccines, with hesitancy rather than inadequate supply being the main constraint on further gains revealing that about 58 percent of the population in advanced economies has been fully vaccinated.
“The forecast assumes that some emerging market economies will join advanced economies in gaining broad vaccine access in 2021. Most countries are assumed to acquire broad access by the end of 2022 and some only in 2023,” IMF informed.
By contrast, the rest of the world has starkly lower shares of population that are fully vaccinated against Covid-19, at about 36 per cent in emerging market economies and less than 5 percent in low-income or developing countries. In these economies, vaccine supply and distribution remain the primary constraints.