IMF warns of divergent recoveries from pandemic

“The global economic recovery continues. But divergences between economies persist, reflecting stark differences in vaccine access and policy support,” the International Monetary and Financial Committee (IMFC) said in a communique during the annual meetings of the IMF and the World Bank on Thursday.

“The emergence of virus variants has increased uncertainty, and risks to the recovery are tilted to the downside,” Xinhua news agency quoted the communique as saying, adding strong international cooperation and immediate action are needed to expedite universal vaccination to stem the spread of the pandemic.

“Against a complex environment, we will carefully calibrate our domestic policies to the evolving pandemic and available policy space. We will continue to prioritize health spending and protecting the most vulnerable,” the IMFC said.

The IMFC also noted that central banks are closely monitoring inflation pressures and they will “act appropriately” if risks of inflation expectations de-anchoring become concrete.

“Clear communication of policy stances can help limit negative cross-country spillovers. We will continue to monitor and, as necessary, tackle financial vulnerabilities and risks to financial stability,” the IMFC said.

The IMF on Tuesday slightly revised down its global economic forecast amid the Delta variant-fuelled Covid-19 surge, highlighting the “great vaccine divide”, supply bottlenecks and inflation risks.

In its newly released World Economic Outlook, the IMF projected the global economy to grow by 5.9 per cent in 2021, down by 0.1 percentage point from July’s forecast.