Chief Economist at the International Monetary Fund (IMF), Gita Gopinath, has forecast a return to growth in major economies in the second half of the year.
Recovery will be driven by vaccinations against the coronavirus pandemic, which is ongoing, albeit at a slow pace, in developed countries, the IMF official said.
“Right now, it’s a race between the virus and the vaccine. It’s a very dark and difficult winter, but there is light at the end of the tunnel. There is the vaccine and stimulus-driven recovery that one would expect in the second half of the year,” Gopinath told CNBC on Tuesday.
Since the Covid-19 pandemic began, governments and central banks across the world have provided trillions in stimulus packages.
As the second wave of infections hits countries around the world, along with emerging mutating strains of the virus in the United Kingdom and South Africa, major economies are returning to lockdowns and governments have announced billions more in relief packages, which the IMF official expects to aid recovery.
The British government this week announced a new financial support package of $6.2 billion for businesses to soften an expected recession caused by a surge in Covid-19 cases that has prompted a third national lockdown. That followed a $900 billion pandemic bailout package signed by President Donald Trump in December, providing billions of dollars in coronavirus aid to hospitals, schools, businesses, and American families.
Also Read: World Bank Paints Bleaker Outlook For Global Economy As Pandemic Persists
Meanwhile, Covid-19 vaccines are being rolled out across the West – in the United States, the UK, Italy, Spain, Greece, France, Poland, Germany, the Netherlands – and the Middle East, where the United Arab Emirates plans to vaccinate some 9 million residents, both nationals and non-citizens.
In less developed countries, particularly Africa, governments are playing catch-up in securing available and approved shots with much hopes pinned on the global COVAX initiative – a programme that aims to buy and deliver vaccines for the world’s poorest people.
Africa’s most populous economy, Nigeria, expects to receive 100,000 doses of the Pfizer-BioNTech vaccine by the end of January and 42 million shots of approved jabs currently available through the programme.
With significant progress so far, most governments on the continent are expected to start administering vaccines across their nations by the beginning of the second quarter of the year or even mid-2021.
Also Read: Covid-19: Nigeria to Vaccinate 40 Percent of Population in 2021
As the distribution of the vaccines and inoculation campaigns differ, recovery will most likely be uneven, the IMF official warned. With much of the ongoing vaccinations happening in developed countries, they are expected to start returning to normal later this year.
Even as new cases soar and record numbers of virus patients flood hospitals, mass vaccinations have been slow generally, hampered by bureaucracies, a lack of personnel, and shortages of vital equipment.
But the IMF Chief expects most developed countries to be covered by this summer while full coverage should be achieved by the end of 2022.
An updated outlook on the global economy in 2021 is expected from the IMF later this month. In its last forecast, the Fund projected a 5.2% rebound in global growth this year after a record 4.4% contraction in 2020.
