(Washington) ‘Advanced economies are having their best days, low-income countries are seeing their worst’: The global economy will have its strongest growth in 80 years this year, but poor countries lacking COVID-19 vaccines are still lagging World Bank regrets Tuesday .
The Washington Foundation raised its global growth forecast for 2021 by 1.5 points to 5.6%, driven by a strong recovery in “some major advanced economies,” including the United States.
For its part, emerging and developing economies will register a growth of 6%.
“It (rate) is impressive,” Ayhan Kose, vice president of the World Bank, responded during an interview with AFP, in theory. “But China plays an important role,” the economist explains, with a growth forecast of 8.5%.
Excluding China, the growth of these countries will be only 4.4%, and if we take only low-income countries, the growth drops slightly to less than 2%, he explained.
“Advanced economies are having their best days, low-income countries are having their worst days,” he adds.
The World Bank has already improved forecasts for almost all countries and regions except for low-income countries.
Policy makers should keep in mind that “it is absolutely necessary to vaccinate quickly and vaccinate everywhere, not just in advanced economies.”
Kosei said vaccination was too late and “we should worry about new waves” of COVID-19.
« Bien qu’il y ait des signes encourageants de reprise mondiale, la pandémie continue d’infliger pauvreté et inégalités aux populations des pays en développement du monde entier », a résumé de son côté le présidental de la Banque, David statement.
Inflation is this
About 90% of advanced economies are expected to return to their pre-pandemic per capita income levels by 2022. However, only about a third of emerging and developing countries are expected to achieve this.
As a result, the per capita income gap between advanced economies and the poorest countries, which narrowed before the pandemic, will remain stagnant or even widen.
The United States has benefited from both major stimulus packages and a rapid and effective vaccination campaign. China benefits from strong demand as trade resumes.
However, despite the historic recovery, global GDP will be about 2% lower than the pre-pandemic forecast for this year, the World Bank explained.
Low-income economies accumulate difficulties because they also suffer from exacerbated insecurity.
There are also other risks confusing the future of emerging countries, particularly inflation, as the World Bank asserts.
“We believe that the acceleration of inflation will be temporary,” Ayhan Kose said.
But right now, low-income countries are struggling with rising food prices, which account for about half of household consumption. This leads to growing food insecurity in these countries, the World Bank report highlights.
So the institution is watching this indicator like smoldering milk, especially since “if inflation is not temporary and central banks respond (by increasing interest rates), this will have implications for emerging economies,” stresses Mr. Kose.
With the asynchronous economic recovery around the world, a sharp rise in interest rates, especially in the United States, would further weaken these countries, which will face the increase in the costs of refinancing their debt.
Even before the pandemic, David Malpass recalls, half of the low-income countries had difficulty repaying their debts or were “highly vulnerable” to debt default.
He therefore urges “continued global cooperation” and private sector participation in debt relief for the poorest countries.
Through the G20, the World Bank and the International Monetary Fund pushed the initiative to suspend debt service for dozens of low-income countries. But this device expires at the end of the year.