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IMF official frets over risks to global recovery

By JONATHAN POWELL in London | China Daily Global | Updated: 2021-02-09 09:46

People walk past a no entry sign in the City of London financial district amid the outbreak of the coronavirus disease (COVID-19), in London on Sept 23, 2020. [Photo/Agencies]

The resurgence of infections and the spread of new variants of the coronavirus are delaying a global economic recovery from the pandemic crisis, a senior official with the International Monetary Fund said.

While the world economy has "started to climb back from the depths of the crisis", defeating the pandemic remains the economic priority, said Antoinette Sayeh, the IMF's deputy managing director.

COVID-19 is "the biggest, most immediate crisis of our lifetimes", Sayeh said in a keynote speech for the virtual Warwick Economic Summit, an international conference hosted by the UK's University of Warwick.

The fluctuating situation with variants is "a powerful reminder that we cannot achieve a sustainable recovery anywhere unless we defeat the pandemic everywhere", she said.

The IMF had approved more than $105 billion in financing for 85 countries since the start of the outbreak, Sayeh said. "We expanded concessional financing for low-income countries and provided immediate debt relief to 29 of the poorest, most vulnerable ones," she added.

The IMF last week forecast global growth at 5.5 percent in 2021, which Sayeh said "reflects the positive effects of vaccinations in some countries, adaptation to containment measures, and continued policy support".

But Sayeh warned of "tremendous uncertainty" around this forecast, especially considering that 2020 ended with "a contraction of 3.5 percent, meaning the worst peacetime recession since the Great Depression".

She said: "How we fare over the next few months will be critical - much of it will depend on the outcome of the race between the mutating virus and vaccines, and on the ability of countries to provide continued support until herd immunity is achieved and the recovery is fully underway. Our immediate priority must be to bring the health crisis under control."

The IMF's second priority is to "maintain economic lifelines and policy support in countries where the virus is surging", she said.

The third priority is to reverse a "dangerous divergence between rich and poor countries".

She concluded: "If we begin to sow the right seeds of investments and policies today, we can go even further and build the foundation of a 21st century economy."

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