E Global Recovery

Image by Sumanley xulx from Pixabay

 “Vaccine access has emerged as the principal fault line along which the global recovery splits into two blocs: those that can look forward to further normalization of activity later this year (almost all advanced economies) and those that will still face resurgent infections and rising COVID death tolls. The recovery, however, is not assured even in countries where infections are currently very low so long as the virus circulates elsewhere. The global economy is projected to grow 6.0 percent in 2021 and 4.9 percent in 2022.” (IMF, World Economic Update, July 2021) 

The global economic scene remains very distressing, particularly because the access to vaccines is so clearly determining the economic recovery prospects of the various countries. 

The heart of the matter is that close to 40% of the population in advanced economies has been fully vaccinated, while only a little more than 10% of those in the emerging market countries have been vaccinated, with even far fewer are vaccinated in the low-income countries.

And as the IMF’s recent projections indicate, low-income and emerging market countries continue to face rising prices and an unusually weak economic recovery, while the advanced countries which are recovering faster because of vaccine access, are still not assured of a rapid recovery from the pandemic recession.  

In this regard, it is useful to review how badly the economies of some of the key countries performed both in terms of the pandemic downturn and in terms of the projected path of recovery.  

When the pandemic triggered an economic decline in 2020, the hardest hit advanced countries in terms of real GDP were Spain (-10.8%), the United Kingdom (-9.8%), Italy (-8.9%), and France (-8.0%).  

Bear in mind that a 2% or 3% positive GDP expansion would be the usual growth norm for most advanced countries, so these 2020 contractions were quite huge. Even the US, which experienced a 3.5% growth contraction last year, was about 5.5% or more below its usual normal growth rate.   

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