For 2021, many predicted that global economic growth would reach 5.5%. However, recovery has played out better than anticipated due to the US governments release of a fiscal stimulus package and the arrival of millions of COVID-19 vaccines. Many say there is a gap in global recovery. Despite major steps towards recovery in the latter part of 2020, GDP’s have remained low in many countries. Recovery has differed from country to country and industry to industry. While a few nations have recovered fully and returned to growth levels seen before the pandemic, many large economies still have a ways to go before they are back to the success seen prior to the pandemic.
Benjamin Gordon Palm Beach: Exploring the global economy in 2021
Advanced economies and emerging markets have shown signs of growth gaps; as per estimates, developing and emerging countries will witness a 22% decline in cumulative income per capita from 2020 to 2022 . After the onset of the pandemic, this implies that about 90 million people will be in a state of extreme poverty. According to Benjamin Gordon Palm Beach, this high number demonstrates the growing gaps in recovery. There remains more uncertainty in this world than certainty in recovery. Another issue at hand is the healthcare crisis. Nobody knows for sure how long the COVID-19 pandemic will be a daily part of our lives. Vaccines have not reached every part of the world equitably.
Some believe that low-income countries may not receive vaccines before 2022, which means that this problem is here to stay for the foreseeable future. The pandemic will not be over at the same time for every country. With the discovery of new strains, there is fear that current vaccines may not prove effective in the longterm, meaning that recovery might come later.
Benjamin Gordon Palm Beach draws our attention towards policies. It is not clear what legislation will be most effective, and each country has its own take on attacking this crisis. Some countries face high debts and little financial flexibility. Low-income countries face greater issues due to tight financial constraints. Some advanced economies witnessed jumps in bond returns after the economy headed towards recovery. If this trend continues, monetary stimulus may be easier to roll out for governments.
Still, for much of the world, economic outlook remains bleak. Advanced economies faced an almost 5% decline in production even before the recession hit. For some countries, these figures were even worse. Climate change also poses a significant threat to the global economy.
One of the first things that countries can do to reach recovery faster is to ramp up their vaccine production efforts. Low-income countries should seek out financial support to procure them as well. There is a need for governments to focus on building an inclusive and sustainable post-pandemic economy. Policies should strengthen recovery and resilience by addressing long-term problems. The way forward might be the adoption of clean energy and digital solutions. The International Monetary Fund (IMF) is offering concessional financing and debt relief for less developed countries.
As such, the international community needs to work together to extinguish the pandemic and ensure a balanced and sustainable global economic recovery.