Pandemic will reverse progress of the 90s and “increase inequalities”

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“A pandemic will reverse the progress made since the 1990s in terms of reducing world poverty and will increase inequality“, can be read in the document released today by the international financial institution.

According to the IMF, after a recovery from the effects of pandemic in 2021, “world growth is expected to slow down gradually to around 3.5% in the medium term”, an assumption that compares with growth designed before pandemic for the 2020-2025 period.

A pandemic was “a significant setback for the expected improvement in the average standard of living in all groups of countries”, both developed and developing economies, says the IMF.

The institution notes that “people who depend on their daily wages and are outside formal support networks faced sudden income losses when restrictions on mobility were imposed”, including migrant workers.

THE IMF recalls that the stock of world public debts will increase “significantly”, and that lower tax contributions will hamper sovereign debt service.

The risks to the forecasts of the IMF, which expects the world economy to decline by 4.4% in 2020, are “unusually large” in pandemic, according to the document.

A first layer [dos riscos] relates to the path of pandemic, the necessary public health response, and disrupções at activity associated domestic activities, namely in sectors intensive contact“, signals the IMF.

Another source of uncertainty “is the extent of the global spread resulting from low demand, weaker tourism and less remittances”, points out the institution led by Crystal Georgieva.

The fund also points to the sentiment of the financial markets and its implications for world capital flows, and also to the uncertainty regarding the potential of the offer, “which will depend on the persistence of the shock. pandemic, the size and effectiveness of policy responses and the extent of resource failures. “

No silver lining, or IMF notes that “progress with vaccines and treatments, as well as changes in the workplace and by consumers to reduce transmission [do vírus] can allow a return of the activity faster to pre-set levelspandemic sem trigger repeated waves of infections“.

In addition, “an extension of fiscal measures to 2021 may also raise growth above forecasts” accounted for so far.

“However, the risk of worse results than the designed remains considerable. If the virus reappears, if progress in treatments and vaccines is slower than anticipated, or countries’ access to them remains uneven, activity may be lower than expected “, warns the institution Based em Washington.

To IMF, “considering the severity of the recession and the possible withdrawal of emergency aid in some countries, the increase in bankruptcies could combine losses of income and employment”.

“The deterioration in financial sentiment could trigger a sudden stop in new loans (or failures to renew existing debt) to vulnerable economies “, can be read in the document.

The international financial institution also warns of “possible cross-border from weaker external demand “, which can” amplify the impact of specific shocks for some countries “.

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