ECONOMIC RECOVERY PROSPECTS
BBC reports that the International Monetary Fund (IMF) is now forecasting a stronger economic recovery this year and into 2020 than was published on January of this year.
However, the British economy is still only likely to return to pre-pandemic levels in late 2022.
The forecast for growth in the UK is 5.3% for this year and 5.1% in 2022. Whilst there is improvement in both sets of figures, that for 2022 is only marginally higher. The improvement follows last year’s contraction of 9.9%, this being the sharpest experienced in any of the G7 economies.
‘Fairly modest’
The new global forecasts are for growth of 6% and 4.4% this year and next. Again, both are upgrades, the improvement in 2022 being “fairly modest”.
The prediction reflects an up-rating to forecasts for developed economies, especially the United States.
‘Diverging recoveries’
It is reported that in a blog, the IMF’s chief economist said ways out of both the health and economic crises are increasingly visible. Vaccinations are likely to power recoveries in many countries in 2021.
But she also commented about how those recoveries are diverging. Those countries with slower vaccine rollouts, more limited support and those more reliant on tourism are likely to do less well.
The first two are particularly relevant as many of these have less access to vaccines and they also find it more difficult to bear the cost of economic and health policy actions.
Among developing economies, China has already returned to pre-pandemic levels of economic activity. But many are not expected to do so until well into 2023.
Cumulative losses in income per person for the period 2020 to 2022 are likely to be 20% for developing compared with a less severe (but still large) figure of 11% for the developed world.
‘Poverty Gains Reversed’
The IMF says that gains in poverty reduction have been reversed and the number of people counted as extremely poor is likely to have increased by 95 million last year. The number of those who are undernourished will also rise to 80 million.
The report says that divergences are also occurring within countries. Pay inequality is likely to increase for young people and those with relatively low levels of skills in both developed and developing countries. Women will also fare badly as they account for a large share of employment in such as tourism where there is a lot of personal contact.
The pandemic has had a harsh impact on those whose jobs are vulnerable to automation, with process accelerated as a result of the Covid 19 health crisis.
Source: BBC News
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