The International Monetary Fund (IMF) has pointed out that urgent policy action is required to control the COVID-19 pandemic, limit economic scarring and transform the global economy.
The global economic recovery is proceeding with the support of unprecedented monetary, fiscal, and financial assistance over the past year. However, pandemic-induced divergences are persisting, driven by stark differences in access to vaccines and policy space, the Washington-based lender said.
In IMF’s latest global policy update it stated that vaccination of the world population was paramount and that policies should be calibrated to support the recovery and counter growing divergence within and between countries.
“Now is the time to come together and set things right for future generations by steering our way out of the crisis and setting course for a more prosperous future,” the fund said.
The new policy update came following the IMF lowered its growth forecast for the global economy this year, which is now set for a “hobbled” recovery, owing to weakening momentum as a result of COVID-19 outbreaks, uneven access to vaccines, supply chain disruptions and risks from rising inflation. The fund revised down growth in 2021 to 5.9 percent from its 6 percent estimate in July, while keeping its 2022 projection unchanged at 4.9 percent.
Global cooperation to facilitate universal vaccination is necessary to secure global recovery and limit health and economic divergences. The global rollout of COVID-19 vaccines is progressing at alarmingly different speeds, in low-income and developing countries, less than 5 percent of the population is fully vaccinated, compared to about 58 percent in advanced economies, IMF noted.
The goal to vaccinate at least 40 percent of the population in all countries by end-2021 and 70 percent by mid-2022 remains a priority. In order to attain these targets needs urgently ramping up supply to ensure availability of vaccines, diagnostics, and therapeutics in developing countries, including through sharing doses, removing trade barriers on vaccines and related materials, and addressing financing constraints. These efforts are not only moral imperatives but will be instrumental in achieving a more robust recovery.
“We are engaging with other international financial institutions and member groups, including the G20 and G7, in mobilizing resources to help countries address the ongoing health emergency and reduce vaccine and economic inequalities,” IMF said.
The fund noted that policies should be calibrated to the evolving pandemic conditions and available policy space to support the recovery, counter growing divergences, and limit scarring. For fiscal policies, health spending remains a priority and lifelines should be increasingly targeted towards the most vulnerable groups.
Further, the policymakers should seize the moment to hasten the transformation of the global economy, including climate change mitigation, digitalization, inclusion and gender diversity, and the new hybrid work model, IMF said.