The global resurgence of the virus threatens a vigorous growth momentum

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The renewed rise in Covid-19 infections threatens to further divide the global economy between the rich and the poor, which could damage global growth if new outbreaks spread or if key sources of demand are lacking.

More people were diagnosed Covid-19 last week than any other since the pandemic began. The World Health Organization warned this week that new infections are on the rise everywhere except in Europe, led by a number of rockets in India and cases are also on the rise in Argentina, Turkey and Brazil.

This is overshadowing a strong global economic rebound, as not controlling the virus or distributing vaccines evenly risks causing new mutations, first in emerging markets and then in developed nations that had overcome the pandemic. .

Even if this does not happen, a two-speed recovery will curb even inoculated countries by limiting foreign demand for their goods and destabilizing supply chains. The International Monetary Fund said last month that the recovery will be lost by $ 9 trillion by 2025, unless faster progress is made to end the health crisis.

Emerging and developing economy it accounted for two-thirds of global growth before the pandemic and about 86% of the world’s population. This week the World Bank told them they had to be prepared for the possibility that your recoveries will lose strength. A nascent economic renewal in India, the sixth largest economy in the world, is being threatened by the renewal of inter-provincial movement bands to curb a new wave of infections they have suffered. exceeded 200,000 daily over the past week.

“The new case rises represent a check on the reality of the global economy, as it is clear that the pandemic is not about to end,” said Tuuli McCully, Asia-Pacific economy chief at Scotiabank . “Many lower-income economies continue to face serious Covid-19-related challenges and have a long way to go before they return to ‘normalcy.'”

According to data collected by Bloomberg, more than 944 million vaccines have been administered in 170 countries, sufficient doses for 6.2% of the world’s population. But the distribution is uneven with higher-income countries vaccinated about 25 times faster than those with lower ones.

“I see it as a race between virus mutations and vaccine deployment,” said Rob Subbaraman, head of global market research at Nomura Holdings Inc. “A lot of people aren’t aware that, although it is believed that the Spanish flu of 1918 started in the US and then spread to Europe, in the end the countries that suffered the most were in emerging markets. It’s a disastrous sign of that history repeats itself “.

Markets show signs of nervousness. A measure of equities in Asia has lagged globally this month, while the Indian rupee is the worst-performing currency this week in the region. Investors have sought out traditional paradises such as the Japanese yen and have rewarded those with a better history of outbreak management such as the Israeli shekel, the Taiwan dollar and the British pound.

The companies most dependent on the reopening of the global economy are especially vulnerable, and the latest wave of infection overshadows a “reopening of trade at a perfect price,” wrote Stephen Innes, the world’s leading market strategist. Axicorp Financial Services Pty Ltd. in Sydney. a note to customers.

“The glaring problem is that despite the intense efforts made by the medical community around the world, we are not even about to convene it up to date so that people can start again or continue with things more productively.” , according to Innes.