Although the prospects for global economic growth in this year and next are still strong, due to differences in vaccination progress and financial support, the trend of economic divergence among countries is deepening.
On July 27, the International Monetary Fund (IMF) released an update to the World Economic Outlook, maintaining its forecast of global economic growth in 2021 at 6.0%, which will be the fastest growth rate in nearly half a century. And revised the growth rate forecast for 2022 by 0.5 percentage points to 4.9%.
“The global economic recovery continues, but the gap between advanced economies and many emerging markets and developing economies is widening.” IMF Economic Advisor and Director of Research Gita Gopinath (Gita Gopinath) said The press conference pointed out that between 2020 and 2022, affected by the epidemic, the per capita income of advanced economies will decrease by 2.8%, while emerging market and developing economies (excluding China) will decrease by 6.3%.
For 2021, the recovery prospects of developed economies are becoming brighter, and their growth rate is expected to be revised up by 0.5%, but due to the deterioration of the prospects of emerging markets and developing economies (being revised down by 0.4%) ), especially the growth rate of emerging markets in Asia has been significantly reduced (revised by 1.1 percentage points), and the overall global economic growth rate has remained unchanged.
For 2022, the growth momentum of advanced economies is also becoming stronger, and its growth rate is expected to be revised up by 0.8 percentage points, while emerging markets and developing economies are expected to only experience a moderate recovery (the growth rate is expected to be Slightly revised up by 0.2 percentage points).
In the update, the IMF predicts that China’s economic growth rate for this year and next will be 8.1% and 5.7%, respectively, which will be revised down by 0.3 percentage points and up by 0.1 percentage points. As for the reasons for lowering China’s growth forecast this year, the IMF pointed out that this is because China has reduced public investment and financial support.
In advanced economies, the IMF raised the growth forecasts for the United States for this year and next by 0.6 and 1.4 percentage points to 7.0% and 4.9%, respectively; and raised the growth forecasts for the euro zone by 0.2 and 0.5 points for this year and next. Percentage points to 4.6% and 4.3%; the UK’s growth rate forecast for this year and next year has been revised up by 1.7 and down by 0.3 percentage points, respectively.To 7.0% and 4.8%.
"Although broader vaccination may improve the outlook, overall the risk tends to be down." Gopinas warned that the emergence of highly infectious virus variants may undermine the prospects for recovery, and make the recovery by 2025. The cumulative loss of global GDP is 4.5 trillion U.S. dollars.
According to Worldometer's real-time statistics, as of around 6:30 on July 27, Beijing time, there were a total of 195,279,354 confirmed cases of new coronary pneumonia worldwide, and a total of 4,181,853 deaths. There were 510,232 new confirmed cases and 7814 new deaths worldwide in a single day. Iran, India, Indonesia, the United Kingdom, and Russia are the five countries with the largest number of new confirmed cases, and Indonesia, Russia, Brazil, India, and Myanmar are the five countries with the largest number of new deaths.
In addition to changes in the epidemic, the global economy also faces other downside risks. Gopinas pointed out that if the outlook for monetary policy is suddenly reassessed, especially in the United States, financial conditions may also be suddenly tightened when assets are overvalued. In addition, the scale of the upcoming fiscal stimulus measures in the United States may also be weaker than expected. She emphasized that the worsening of the epidemic and the tightening of financial conditions will cause a double blow to emerging markets and developing economies and severely hinder their recovery.
The "dual track" recovery is increasingly severe
The recent surge in mutated virus infections has made people realize that the new crown epidemic is far from over. Currently, a new round of epidemics caused by mutant viruses is raging in many regions of Africa, Asia, and Latin America. Gopinas emphasized that the divergence of the global economic recovery path has been largely affected by the epidemic.
According to statistics from the World Health Organization (WHO), as of July 7, 104 countries have discovered the delta mutant virus in their borders, and another 173 countries have discovered the alpha mutant virus originally reported by the United Kingdom. 122 countries The beta mutant virus first reported by South Africa was discovered, and the gamma mutant virus first reported by Brazil was found in 74 countries.
IMF pointed out in the report that the emergence of new mutant strains has severely hindered the economic recovery of many countries. The organization significantly lowered India’s growth rate forecast for this year by 3.0 percentage points.To 9.5%, the growth rate of the five ASEAN countries is lowered by 0.6 percentage points to 4.3%.
In addition to the epidemic, Gopinas pointed out that policy support is the second source of the widening gap. "Developed economies continue to provide substantial financial support, and have announced US$4.6 trillion in rescue measures that can be used in 2021 and beyond. The upward revision of the global growth rate in 2022 mainly reflects the additional financial support that the United States will initiate and the EU’s The impact of a generation of recovery funds."
Unlike advanced economies, Gopinas pointed out that in emerging markets and developing economies, most rescue measures have expired in 2020, and these countries are rebuilding fiscal buffers. Emerging markets such as Brazil, Hungary, Mexico, Russia and Turkey have also begun to raise monetary policy interest rates to ease inflationary pressures.
The IMF pointed out in the report that in 2020, global government debt will reach an unprecedented level, close to the same scale as global GDP, and will remain near this level in 2021 and 2022. As of early July, countries have provided 16.5 trillion U.S. dollars in financial support to fight the epidemic, and developed countries have "released water" far more than developing countries.
IMF data shows that since April 2021, the global average fiscal deficit has fallen by 0.5 percentage points, and is expected to account for 8.8% of GDP in 2021. This is because the deficits in the United States and China have fallen, partially offset by the European (Germany) , France, Italy).
Inflation in advanced economies may fall back
The world is paying close attention to the recent rise in inflation. Earlier this month, IMF President Georgieva warned that further US financial support may increase inflationary pressures, and warned that the Fed may need to raise interest rates earlier than expected due to continued price increases.
Gopinas also mentioned the inflation issue that has attracted much attention recently. She pointed out that long-standing demand and supply chain bottlenecks are putting upward pressure on prices. Nevertheless, "inflation in most advanced economies will fall back to pre-pandemic ranges in 2022."For this, she gave three reasons:
First of all, a large part of the abnormally high inflation data is temporary, which comes from industries that have been hit hard by the pandemic, such as the industry and the hotel industry, and due to the price base last year. Caused by too low (such as bulk commodities).
Second, the overall employment rate in most countries is still far below the level before the pandemic. Although wages in certain sectors have increased rapidly, the overall wage growth rate is still within the normal range. With the improvement of health indicators and the expiration of special income support measures, it is expected that recruitment difficulties in certain industries will ease, thereby alleviating the pressure of rising wages.
Third, long-term inflation expectations remain stable, and factors such as automation have reduced the sensitivity of prices to changes in the labor market. These factors may accelerate development under the pandemic.
However, Gopinas also pointed out that there is a lot of uncertainty in the assessment of inflation. Longer supply disruptions and sharply rising housing prices may lead to persistently high inflation. In addition, in some emerging markets and developing economies, inflation is expected to remain high in 2022, partly due to continued food price increases and national currency depreciation.
“Central banks should avoid premature tightening of policies when faced with temporary inflationary pressures, but they should be prepared to act quickly when inflation expectations show signs of de-anchorship. Emerging markets should also extend debt maturity if possible and Restrict the accumulation of unhedged foreign currency debt and prepare for a possible tightening of the external financial environment," Gopinas said.
vaccine has become the key to economic recovery
Gopinas pointed out that currently, in developed economies, nearly 40% of the population has been fully vaccinated, while in emerging market economies, the proportion is only 11%. It is even negligible in low-income developing countries. She said that in order to promote a balanced recovery of the global economy, multilateral actions are urgently needed to ensure rapid access to vaccines, diagnostics and treatments on a global scale.
World Health Organization (WHO) Director-General Tan Desai recently warned that the global failure to share vaccines, tests and treatments is contributing to a "dual-track pandemic"-countries with sufficient resources such as vaccines are opening up, and Other countries are locking down to slow the spread of the virus.He said that differences in vaccines around the world conceal a "terrible injustice."
In order to promote the vaccination process, the IMF recently proposed a US$50 billion plan, which aims to increase the vaccination rate in countries to at least 40% and 60% by the end of this year and the middle of 2022, respectively. End the new crown epidemic. According to the IMF, this plan may bring a return of US$9 trillion to the global economy by 2025.
In this plan, one of the most urgent measures is to transfer excess vaccines from developed economies to developing countries. Currently, 75% of vaccines — more than 3.5 billion shots — are vaccinated in only 10 countries. In the context of increasing inequality in global vaccine distribution, the Group of Seven (G7) announced at its June summit that it will share at least 1 billion doses of the new crown vaccine with the world, half of which will come from the United States and 100 million doses from the United Kingdom.
But even if G7 can fulfill the promise, this may be just a drop in the bucket. After affirming the donation of G7, Tan Desai said that if 70% of the global population is to be vaccinated by 2022, based on the fact that per capita vaccinates at least 2 doses, 11 billion doses of vaccine are needed.
Currently, all parties have focused their attention on the G20 summit to be held in Rome, Italy in October. Georgieva again this month called on G20 member states to take urgent action to speed up the vaccination of high-risk groups. It is reported that before the Rome summit, the G20 will have further discussions on issues such as funding for vaccines for poor countries and the impact of new variant viruses.
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