COVID-19 'will erase 30 years of progress fighting poverty'

  • COVID-19 'will erase 30 years of progress fighting poverty'

COVID-19 'will erase 30 years of progress fighting poverty'

Massive injections of government aid kept economies from plunging further in 2020, but the continued presence of Covid-19 means the outlook is highly uncertain, the International Monetary Fund said in its latest World Economic Outlook.

The scale of disruptions in hard-hit economic sectors of the U.S. economy, notably restaurants, retail stores and airlines, suggests that without an available vaccine and effective drugs to combat the virus, many areas of the economy "face a particularly hard path back to any semblance of normalcy", the International Monetary Fund said.

"This is the worst crisis since the Great Depression, and it will take significant innovation on the policy front, at both the national and worldwide levels, to recover from this calamity", Gopinath said.

"We need strong global cooperation and this is most urgent today for vaccine development and distribution", she said.

Global GDP growth forecasts were trimmed for 2021.

"The virus is resurging with localised lockdowns being reinstituted", Gopinath said.

That's more than 15 and 17 percentage points, respectively, higher than the United States share of expected global output.

The country's net debt to GDP ratio is also expected to increase to 78 percent in 2020, up from 74.4 percent in 2019, and is projected to jump to 82.7 percent in 2021; it is expected to start declining as of 2022 to reach 74.8 percent in 2025, according to the report.

The IMF estimated Tuesday that the global economy will shrink 4.4 per cent for 2020.

The senior economist warned that uncertainties of global economic growth are increasing as some countries begin experiencing the second wave of COVID-19 infections recently. Other rating agencies have also revised up their forecast on China's GDP growth this year, to 1.9 percent for Moody's and 2.7 percent for Fitch.

The Egyptian economy still enjoys the confidence of global institutions, as a result of its flexibility in dealing with internal and external challenges, absorb shocks, and mitigate their severity as done with the coronavirus, Minister of Finance Mohamed Maait said Wednesday.

But emerging markets other than China will see a contraction of 5.7% in 2020, worse than the 5.0% predicted in June.

The IMF produced the updated outlook for this week's virtual meetings of the 189-nation lending institution and its sister institution, the World Bank.

Globally, government deficits are set to surge by an average of 9 percent of GDP, while global public debt is projected to approach 100 percent of GDP, a record high, as a result of the ongoing COVID-19 crisis, according to the report.

"We have provided financing to 81 countries, extended debt service relief for our poorest members and have mobilised an additional 21 billion dollars to support lending on concessional, zero-interest, terms".

It welcomed a six-month extension of debt payment suspensions that was approved by the G20 on Wednesday, but said more needed to be done for developing countries.

Poor countries have been hurt the most by the pandemic. And it would end a period of more than two decades in which the rate of extreme poverty had declined.