The International Monetary Fund (IMF), in its World Economic Outlook (WEO) forecast report for July 2021, maintains that the global economic growth forecast remains 6 percent in 2021 and 4.9 percent in 2022, respectively.
According to the WEO, economic prospects have diverged along separate lines, revealing a better economic outlook in favour of developed nations different from their developing counterparts. For this reason, forecasts for emerging markets as well as developing countries have been relegated.
A significant cause for this asymmetric growth outlook has been accrued to the uneven global access to the COVID-19 vaccine between developed and less-developed nations. Access to the vaccine and proper injection of citizens in their numbers have been identified as a critical determinant of economic normalisation across nations, as government and health authorities battle rising death tolls and multiplied variants of the deadly COVID-19 virus.
According to Haver Analytics, Our World in Data and the IMF, 40 percent of the population in advanced economies has received a jab. However, in emerging market economies, 11 percent of the population has been vaccinated.
In developing countries, the IMF reports only 1 percent of the population has received a shot of the vaccine.
Some reports reveal that most of the vaccinated individuals from the developing nations only took the jab to favour ease of travel out of their countries to more developed nations in search for greener pastures.
For instance, many Africans and Asians who have applied for foreign temporary or permanent resident visas to the US or Canada only opted to get vaccinated to avoid the ongoing travel restriction measures they find costly and time-wasting.
Hence, the travel motive for getting vaccinated in these developing countries has been identified as one of the various causes of the slow acceptance of vaccination. Also, several conspiracy theorists along health and religious lines exist about long-run safety concerns due to the vaccine. These combined have limited the acceptance rate of the suspecting public about the vaccination programme.
With the low vaccination rates in these developing nations, there is the fear of increased susceptibility to a third wave. If this occurs, then the affected countries may be on a sloppy ride to a total economic shutdown.
Accordingly, the IMF has marked down growth prospects for developing and emerging nations of the world. In contrast, those of the advanced countries have been upwardly revised due to developed nations’ government effort to drive a fiscal renaissance and improved health support to fight against another viral reprisal.
The IMF also points out that the pandemic has affected labour wages disproportionately. In advanced countries, for instance, incomes have been cut by 2.8 percent while other nations experience a cut in wages by 6.3 percent. This wage cut differential showcases a significant disparity between the expected living standard of citizens in advanced countries versus those in developing and emerging economies.
Therefore, it is expected that while the pandemic lapses, developing nations may further slip down the projected growth trajectory at a faster pace than their developed counterparts. This widening gap is not good as global recovery efforts may be downplayed by a dragging economic retrieval situation displayed by the developing countries.
There is also the discovery of a deepening divide in government support across country classification. While advanced economies have announced a $4.6 trillion commitment in relief support programmes, other countries’ governments have already ended their support programmes while the pandemic evidently still subsists. This shows an active government role in the fight against the pandemic in the advanced nations while there seems to be a passive, nonchalant attitude displayed by governments of developing countries.
With an increase in the rate of international travel occasioned by business interests, tourism, and family reunion, global authorities must come together in a joint effort to fight against COVID-19 as a pandemic resurgence will no doubt derail recovery efforts for everyone.
Governments of developing nations should prioritise vaccine procurement, impose better travel restriction measures, improve healthcare in all forms, and intensify disseminating information related to the pandemic through various media channels, especially at the grassroots level.
Authorities of the advanced economies are advised by the IMF’s WEO report to embark on a fiscal drive to further boost vaccine spread to save more lives and prevent new variants of the deadly virus from developing. The fund also advises these world powers to commit trillions of dollars to advance the path of global growth to secure an equal recovery across unparalleled lines.