G-20 should take “urgent” action to address diverging recovery: IMF

Jul 08 , 2021. 13 hours ago – 20:44 KYODO NEWS

International Monetary Fund Managing Director Kristalina Georgieva. (Kyodo)

WASHINGTON -The Group of 20 major economies should take “urgent” action to address the increasing diverging global economic recovery amid unequal access to coronavirus vaccinations, the International Monetary Fund said Wednesday, citing how faster access to inoculations may save hundreds of thousands of lives.

“The world is facing a worsening two-track recovery, driven by dramatic differences in vaccine availability, infection rates, and the ability to provide policy support,” IMF chief Kristalina Georgieva said in a message ahead of a two-day meeting of the G-20 finance chiefs in Italy from Friday.

“It is a critical moment that calls for urgent action by the G-20 and policymakers across the globe,” she added.

According to a new study by the Washington-based institution, more than half a million lives could potentially be saved in the next six months alone if high-risk populations globally were to gain earlier access to vaccinations.

Georgieva also reiterated her call on the G-20 to endorse a vaccination target of at least 40 percent of the population in every country by the end of this year, and at least 60 percent by the first half of 2022.

To reach the targets, critical actions would include more dose-sharing with the developing world, supporting grant and concessional financing to increase vaccine production, as well as ensuring free cross-border flows of raw materials and finished vaccines, the IMF said.

On the current state of the global economy, the IMF managing director said recovery is progressing “broadly in line with” the April projections of 6 percent growth this year, a sharp turnaround from a 3.3 percent contraction last year due to the pandemic.

But she also noted that the world is keeping a close eye on the recent pickup in inflation, particularly in the United States as the country is serving as a key driver in the global economic recovery.

The risk of a more sustained rise in inflation or inflation expectations could potentially require an earlier-than-expected tightening of U.S. monetary policy, and higher interest rates in the United States could lead to “significant capital outflows from emerging and developing economies,” she warned.

“In order to keep inflation expectations well anchored, major central banks have to carefully communicate their policy plans,” she said, adding that doing so would “help prevent excess financial volatility at home and abroad.”

The G-20 consists of Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.

The upcoming meeting of G-20 finance ministers and central bank governors in Venice will be their first in-person meeting since February last year.