The global economic recovery continues to be divided according to the access of economies to vaccines. Over the past four months, the gaps have widened again considerably. “The economic outlook has diverged from one country to another since the last forecast of April 2021”, writes the International Monetary Fund (IMF) in its forecasts of the evolution of the world economy published on Tuesday.
Access to vaccines is “the critical fault line” along which the global recovery splits “into two blocks”, scientists warn. There are those economies that can look forward to further normalization during the year – it’s almost all Western economies, including Germany. In these states, about 40 percent of the population is vaccinated.
For countries that do not have sufficient access to vaccines, however, things continue to decline. These are countries “that will still face new infections and an increase in Covid deaths”. According to the IMF, only about 15 percent of the population in emerging and developing countries is vaccinated, in poor countries it is even less, only a few percent.
Germany’s economy is expected to grow more slowly than that of France, Spain and Italy in 2021
The IMF is urgently warning Western economies not to stand idly by and monitor this uneven development – if only for their own benefit. “However, even in countries where infections are currently very low, a cure is not guaranteed as long as the virus is circulating elsewhere.” If the weaker states do not receive enough vaccines, development there will endanger the global recovery and therefore that of the Western world as well.
The IMF assumes that the global economy will grow at an average of 6% this year. For the coming year, economists calculate with 4.9 percent. The fund confirms the most recent forecast for the year 2021 – but with corrections opposed to the two state blocks, namely the block with access to enough vaccines and the block with little or no access to vaccines. The outlook for emerging and developing countries, particularly in Asia, has been revised downward for 2021. At the same time, the IMF has revised its forecast for Western economies upwards by 0.5%. Researchers speculate that new US President Joe Biden’s massive $ 2 trillion program and improved health data in Western states will spur growth.
In the group of the four largest countries in the euro area, Germany is expected to post the weakest economic growth this year – according to forecasts, gross domestic product is expected to increase by 3.6%. The French economy is expected to grow by 5.8%, Italy by 4.9% and Spain by 6.2%. Spain could have a head start in the coming year, the other three economies are expected to grow by a good four percent.
In some emerging and developing countries, inflation could increase more sharply
Emerging markets are also expected to be particularly affected by inflation. Overall, economists assume that inflation will only be temporarily higher than in previous years. The latest price pressures reflect “largely unusual developments related to the pandemic and temporary weaknesses in supply and demand,” they write. Since supply chains have been disrupted and demand has increased sharply at the same time, there are unusually frequent bottlenecks that lead to steep price increases. However, “inflation in most countries is expected to return to pre-pandemic levels in 2022”. However, the IMF has not given the green light: analysts write that uncertainty remains high. In particular, already disadvantaged economies should prepare for worse times: some emerging and developing countries should expect higher inflation due to sometimes very high food prices.
The IMF has called on central banks to clearly communicate the outlook for inflation. He did not rule out that temporary pressures may continue and that central banks “may need to take preventive measures”.