The cost of the COVID-19 pandemic to the global economy in lost output over the 2020-24 period compared to pre-pandemic projections is $15 trillion and it would have been three times worse if policymakers had not acted rapidly, according to the International Monetary Fund (IMF).
The IMF moved quickly to help people and countries, while huge uncertainty overshadowed the global economy’s outlook and the world struggled with the pandemic’s unknowns. Also to tackle the health emergency, countries had to bring economic life to a standstill during the Great Lockdown.
The fund estimates showed that the governments have spent $16 trillion on fiscal support while central banks have boosted their balance sheets by a total of $7.5 trillion.
“We know that some pro-growth reforms were deferred, if not reversed, and some economic scarring has occurred. The same energy that is being put into vaccination and plans for recovery spending also needs to be put into growth measures to make up for this lost output.”
Last year’s downturn piled more debt on countries, particularly emerging markets and developing economies, limiting their ability to confront rising poverty and inequality. According to the fund, public debt now stands at more than 100 percent of global GDP, exceeding the high set at the end of WWII.
The IMF and the World Health Organization (WHO) have joined together to show how the two organizations had worked together to save lives and the global economy. They’ve also urged for more focus on the role of open trade policies, particularly in the areas of food and medical supplies, in combating the virus, reviving economic growth, and restoring jobs.
IMF believes that reforms could help emerging market countries restore investor confidence even as financial conditions tighten and if inflation lingers in advanced economies. For low-income countries who had depleted their policy space, the returns on growth-oriented reforms can be high enough to avoid extreme fiscal austerity, allowing them to protect social and health spending.