The poorest countries are “left behind” in the pandemic recovery
The World Bank warned on Tuesday that if vaccine supplies fail to materialize and global inflation rises, developing countries will be left behind in the pandemic recovery and face the risk of another economic downturn.
Emerging economies are Particularly vulnerableIt said that rising prices and interest rates have weakened their ability to cope with the high debt accumulated during the coronavirus crisis.
The bank stated in its twice-a-year Global Economic Outlook report: “Although advanced economies are rebounding, many of the world’s poorest countries are being left behind to reverse the shocking human and economic pandemic. Cost, there is still a lot of work to be done.”
“In addition,” it added, “recovery is not guaranteed: additional Covid-19 waves, further vaccinations delays, rising debt levels or rising inflationary pressures may still bring setbacks.”
It stated that the recent recovery in global economic growth cannot make up for the suffering caused by the pandemic to the poorest people. It stated that by 2022, about two-thirds of emerging and developing countries and 75% of the most vulnerable and conflict-affected economies will suffer per capita income losses in 2020 that will not be completely eliminated.
The World Bank estimates that by the end of this year, approximately 100 million people will be plunged back into extreme poverty since the pandemic began.
World Bank President David Malpass said: “Global coordinated efforts are essential to accelerate vaccine distribution and debt relief, especially for low-income countries.”
The report emphasizes the need to expand the distribution and deployment of vaccines as a prerequisite for a lasting global recovery.
However, it did not mention the growing demand for vaccine production or pharmaceutical companies to suspend intellectual property rights in response to supply shortages. last month, U.S. support suspension Such rights to the Covid-19 vaccine make the United Kingdom and the European Union the main opponents of this initiative.
In an interview with reporters, Malpass said that the World Bank does not support the cancellation of intellectual property rights, because doing so may endanger R&D expenditures.
“The World Bank supports the licensing and transfer of technology to developing countries to strengthen global supply,” he said. “A very critical part of the supply chain is the invention and creation of manufacturing technology. The most important thing is that when we enter the booster stage, it is crucial [research and development] Traffic continues to increase so that we can develop vaccines suitable for new variants. “
The Washington-based agency pointed out that record debt levels around the world, especially in emerging and developing countries, are a threat to economic stability. It stated that the global financial system is vulnerable to sudden increases in interest rates if investors’ risk aversion is rising, inflation or currency tightening is expected to accelerate.
According to the report, in all emerging economies that set such targets, half of this year’s consumer price inflation may exceed expectations. If the interest rate hike is temporary, and consumers and investors continue to believe that the goal will be achieved, policymakers may be able to maintain monetary policy unchanged.
“However, if inflation expectations may become unstable, [emerging market and developing economy] The central bank may be forced to tighten monetary policy excessively,” the report warned.
Ayhan Coase, director of the World Bank’s Outlook Group, which analyzes changes in the global economy, said that rising inflation in the coming months may complicate policy choices in poorer countries, as some of them still rely on expansionary support measures to ensure a lasting recovery.
“If increasing inflationary pressures cause market participants to worry, they may trigger an increase in the risk premium,” he said. “Emerging markets and developing economies are susceptible to their record high debt levels. In the event of market disruption, capital outflows may force them to tighten policies, thereby inhibiting their recovery.”