Faster progress on medical solutions against the novel coronavirus could quicken countries’ economic recovery, projected to add almost $9 trillion to global income by 2025, the IMF’s managing director has said.
During a news conference following an annual meeting with the World Bank late on Wednesday, Kristalina Georgieva said strong international cooperation on vaccine development and distribution was needed now more than ever.
“Nine months into the pandemic, we are still struggling with the darkness of a crisis that has taken more than a million lives,” she stressed.
Though the picture over the last few months has become less dire, the IMF continues to project the worst global recession since the Great Depression, Georgieva warned.
“Growth is expected to fall 4.4% this year and over the next five years, the crisis could cost an estimated $28 trillion in output losses.”
According to the IMF, there are three priorities that policy makers should take into account during the pandemic.
Underlining that essential measures to protect lives and livelihoods should continue, Georgieva said: “A durable economic recovery is only possible if we beat the pandemic everywhere.”
She added that stepping up vital health measures would be as important as fiscal and monetary support to households and firms.
“These lifelines such as credit guarantees and wage subsidies are likely to remain critical for some time.”
Secondly, she highlighted, building a more resilient and inclusive economy with public investment, especially in green projects and digital infrastructure, could be a game changer.
“It has the potential to create millions of new jobs, while boosting productivity and incomes,” she said.
Dealing with debt would be the third priority.
Global public debt is projected to reach a record high of 100% of GDP in 2021.
“Addressing this issue over the medium-term will be critical. But for many low-income countries, urgent action is required now,” she said.
Given their heavy debt burdens, these countries are now struggling to maintain vital policy support, she added.
The global financial body reached over $280 billion in lending commitments — more than a third of that approved since March.