Global outlook improves, but risks remain

A staff member at a packaging plant for COVID-19 inactivated vaccine products in the Beijing Biological Products Institute Co Ltd in Beijing, China, Dec 25, 2020. [Photo/Xinhua] 

Despite the pandemic, the International Monetary Fund forecast on Tuesday a stronger recovery of the world economy this year than it did in its October forecast. It predicts global growth of 5.5 percent this year, 0.3 percentage points higher than its October prognosis — mainly due to the rollout of vaccines and government stimulus policies.

It also predicted a global contraction of 3.5 percent in 2020, a 0.9 percentage point improvement on its October forecast of a 4.4 percent slump, reflecting the stronger-than-expected momentum in the second half of last year.

The encouraging new outlook offers some much needed confidence that this year will carry on that positive momentum. Faster growth would certainly help ease the economic pains being felt by many economies after the global economy was plunged into the worst recession since World War II by the pandemic, as it would mean more jobs, higher wages and new business opportunities.

But as the IMF points out, the world economy faces "exceptional uncertainty" as new waves of infections and variants of the virus continue to pose risks. This requires not only fair distribution of the vaccines, but also policy support for those in need.

There remains much to be desired for the global economy to be put on the right track, especially in terms of the global allocation of vaccines, as the hoarding and bulk-buying of vaccines by rich countries has basically deprived 90 percent of the world's poorest of the opportunity to be inoculated. This will unavoidably leave the economic recoveries of developing countries lagging behind, thus putting a drag on overall global growth.

To make it worse, as many as 90 million people could be pushed into extreme poverty this year — meaning they will be forced to survive on less than $1.90 a day — because of the impacts of the pandemic. This could reverse 30 years of progress made in fighting global poverty, as the IMF warned in its World Economic Outlook report.

All this calls for a return to multilateralism and increased international cooperation in the fight against the virus. China, as the only major economy to register positive growth last year, 2.3 percent, has played its due role in sustaining global growth — by not only making the vaccines it developed international public goods, but also helping keep the global industrial and supply chains stable with its fast restored economic activities after the epidemic hit. It has also pledged to help African countries with their economic recovery through massive debt reliefs.

The IMF forecasts the Chinese economy will grow 8.1 percent this year, meaning there is every reason to believe that so long as China maintains its strong grip on the virus, it will continue to light the way for a global economic recovery.

The views don't necessarily reflect those of Qiushi Journal.