Strong global growth thanks to vaccinations

Washington (dpa) – The availability of corona vaccines determines the development of the global economy: According to the International Monetary Fund (IMF), industrialized countries can continue to expect strong growth this year, while poorer countries are stuck in the corona crisis .

«The outlook for the poorer developing countries has clearly darkened», said IMF chief economist Gita Gopinath. “Access to vaccines remains the main driver of the turmoil in the global recovery.” The poorer countries also lack the financial leeway to support the economy.

On Tuesday, the IMF lowered its forecast for global economic growth this year by a marginal 0.1 percentage points to 5.9 percent. As in the previous forecast from July, the IMF continues to expect growth of 4.9 percent for 2022. The inflation rate will therefore not normalize again until the middle 2022.

However, behind the slight change in the global growth forecast, there are significant downgrades for some countries, as Gopinath explained. In addition to the difficulties faced by many emerging and developing countries, the short-term growth prospects for the industrialized countries have also deteriorated due to problems with global supply chains. The downgrades would be partially offset by the better growth prospects of the large commodity exporters, who benefit from higher prices.

Industrialized countries, in which on average around 60 percent Population are finally vaccinated can look forward to strong growth. In contrast, the poorest countries, in which only around five percent of the population are fully vaccinated, are more likely to stagnate. While the economic output of the industrialized countries will soon be higher than before the pandemic, the group of developing and emerging countries will likely take years to catch up, the IMF warned.

The growth forecast for the USA, the the world’s largest economy, the IMF lowered it by one percentage point to 6 percent this year, but raised it slightly to 5.2 percent for 2022.

The IMF corrected for Germany his forecast for this year by 0.5 percentage points down: The gross domestic product should 2021 grow by 3.1 percent. The IMF expects 4.6 percent for 2022. The IMF raised the forecast for the euro zone for 2021 by 0.4 percentage points to 5 percent – partly supported by stronger growth in Italy and France.

The presentation of the new The forecast was overshadowed by a scandal involving IMF boss Kristalina Georgieva. She was accused of influencing an important country ranking in favor of China on her previous top post at the World Bank 2017. She is said to have put pressure on employees to prevent China from slipping in the World Bank’s business climate index (“Doing Business”). Former EU Commissioner Georgieva (68), who has headed the IMF since the end of 2019, has rejected the allegations of manipulation.

After eight meetings on the subject, the Executive Council of the IMF Georgieva now expressed its “full confidence”. US Treasury Secretary Janet Yellen, who represents the largest shareholder in the IMF, said the US saw “no basis for a change in IMF leadership” without further direct evidence of Georgia’s role. The USA would follow the processing closely. In order to strengthen the integrity of the data collection and the credibility, «proactive steps» are now necessary. Chancellor Angela Merkel (CDU) said after a digital G 20 conference on Afghanistan that she was joining the supervisory body that Georgieva had expressed his “full confidence”.

For the World Bank and the IMF, the alleged manipulation of data is a serious accusation. For the organizations based in Washington, the independent and non-political collection and compilation of international data is part of their core business. The data of the organizations are often a basis for far-reaching decisions, for example when it comes to aid money.

The timing of the scandal came at an inopportune time for the IMF and World Bank, because finance ministers and central bankers gather this week and other experts at the annual meeting of the organizations. Due to the pandemic, the meeting is partly taking place online. Finance Minister Olaf Scholz and other participants were expected in Washington.

The IMF emphasized that the new economic forecast was associated with great uncertainty. A less favorable course of the pandemic, in particular due to more aggressive variants of the coronavirus, or a persistently high inflation rate in the USA, which would force the central bank to intervene, could slow growth. “The risks to the economic outlook have increased overall and political decisions have become more complex,” said Gopinath revert to pre-pandemic value. The high inflation rate is mainly due to temporary factors such as the recovery after the corona crisis, the shortage of certain products such as microchips and problems with the supply chains, said the IMF. Higher energy prices also played a role.

The central banks would therefore have to “walk a fine line” in their monetary policy for the time being. You would have to weigh the risk of inflation and financial risks against supporting the economic recovery, said Gopinath.

The IMF expects an inflation rate of 2.8 percent for the industrialized countries this year and 2.3 percent next Year. In July he had expected 2.4 percent and 2.1 percent.

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