The recovery of the world economy needs to pass three passes
release time：2021/8/13
The International Monetary Fund (IMF) on Monday released an update to its World Economic Outlook, leaving its 2021 global growth forecast unchanged at 6 percent but warning of widening recovery "fault lines" between different economies. Analysts believe that rising inflation, uneven recovery and COVID-19 have repeatedly become the triple danger that the world economy must overcome for sustained recovery.
Since the beginning of this year, inflationary pressure has been rising in the world's major economies. Economists believe that the rise in global inflationary pressure is mainly influenced by the following factors: the large scale fiscal stimulus and loose monetary policy adopted by advanced economies led by the United States to cope with the impact of the epidemic, resulting in a serious excess of global liquidity; In some developed economies, the epidemic is easing, and household consumption is rapidly rebounding. However, the supply bottleneck caused by the epidemic has caused insufficient supply of goods and services, and the imbalance between supply and demand has further pushed up prices. The Federal Reserve and the European Central Bank have adjusted their monetary policy frameworks to be more tolerant of inflation, which has also contributed to higher inflation expectations.
In the report, the IMF pointed out that the recent rise in inflationary pressures was mainly caused by the pandemic related factors and temporary supply and demand mismatch. Once these factors subside, inflation in most countries is expected to return to pre-pandemic levels by 2022, but the process remains highly uncertain.
The combination of rising inflationary pressures and the fragility of the economic recovery puts loose monetary policies in advanced economies in a quandary.
Affected by multiple factors, such as uneven distribution of COVID-19 vaccine, different policy support levels among countries, and disruptions in global supply chains, the pace of global economic recovery has become increasingly fragmented, and the fragmentation of the global economic and trade landscape has become more apparent.
As of mid-July, nearly 40 percent of the population in advanced economies had been vaccinated against COVID-19, and about 11 percent in emerging economies, compared with just 1 percent in low-income economies, according to the IMF.
The resurgence of COVID-19 remains the biggest uncertainty affecting the world's economic recovery, with low vaccination coverage in many countries casting a shadow over the fragile global economic recovery.
In the report, the IMF noted that the global economy is expected to grow by 6% in 2021 and 4.9% in 2022, assuming that global novel coronavirus transmission drops to lower levels by the end of 2022 as countries continue to adopt more targeted epidemic response measures and vaccination efforts continue. If the epidemic does not meet expectations, global economic growth this year and next will be significantly lower than expected.
The sustained spread of the highly contagious novel coronavirus variant could "derail" the world economic recovery and could result in a cumulative loss of global economic output of about $4.5 trillion by 2025, IMF chief economist Gita Gopinath warned.
As Gopinath said, the recovery of the world economy can only be secured if the pandemic is rolled back on a global scale. However, once monetary policy shifts in major advanced economies, global financial conditions are likely to tighten sharply and the recovery will be set back. The timing and pace of the exit from easy monetary policy in advanced economies is therefore equally critical to consolidating the global recovery.
