Global economic recovery after COVID-19 pandemic remains precarious

Friday, 2021-10-22 15:18:51
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Staff wear protective masks at the Volkswagen assembly line in Wolfsburg, Germany, April 27, 2020. (Photo: Reuters)
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NDO – The global economy in the last three months of 2021 continues to face many difficulties, making the prospect of recovery after the COVID-19 epidemic still precarious. Many countries are struggling to both fight against the pandemic while finding solutions for economic recovery.

Within the framework of the Annual Meetings co-hosted by the International Monetary Fund (IMF) and the World Bank (WB), the IMF has lowered its forecast for global growth in 2021 to 5.9% from 6%. According to the IMF, although the overall reduction in the forecast is only 0.1%, for some specific countries, the decline will be steeper. The impact of the COVID-19 pandemic and inequality in the distribution and sharing of vaccines to poor countries are increasing economic disparity.

The phenomenon of broken goods supply chains has worried many countries. Explaining the situation of the “bottleneck” of the supply chain, many countries believe that this disruption has comes from the unprecedented developments of the pandemic, along with a strong need for recovery as many economies began to reopen. In particular, a shortage of essential services such as the closure of seaports, the lack of cargo vehicles and labour has left a “big hole” in the supply chain.

The imbalance between supply and demand has caused energy and commodity prices to escalate, creating inflationary pressure and threatening to derail economic recovery. The IMF forecasts inflation will return to pre-epidemic levels by 2022, but warned ta prolonged supply disruption could alter inflation forecasts.

Some experts also emphasised that besides finding ways to alleviate the global shortage of goods, the current supply chain congestion problem shows that the world needs to pay attention to promoting global value chains to work better and more efficiently, in order to overcome similar “shocks” in the future.

Huge budget spending packages for the fight against the COVID-19 epidemic have also caused “headaches” for many countries as their public debt skyrockets.

According to data from the United Nations Development Programme (UNDP), the situation has become more difficult for many developing countries, already vulnerable to debt, now having to spend unprecedentedly high levels of money to fight the epidemic and prevent their economies from falling into recession. Public debt in low-income countries increased 12% to a record US$860 billion in 2020.

Analysts have called on developed countries to step up aid and share vaccines to help developing countries in the fight against COVID-19, thereby hoping the world will quickly repel the epidemic and recover in an even and sustainable way.

BINH MINH/Translated by NDO