WASHINGTON (Reuters) – The International Monetary Fund’s No. 2 official on Saturday signaled emerging signs of a stronger global economic recovery, but warned that significant risks remained, including the emergence of coronavirus mutations.
IMF First Deputy Director General Geoffrey Okamoto said in early April the Fund would update its January forecast of 5.5% global growth to reflect additional fiscal stimulus spending in the United States, but he gave no details.
In a speech at the China Development Forum, Okamoto expressed concern about the growing divergence between advanced economies and emerging markets, with some 90 million people below the extreme poverty line since the pandemic began.
Okamoto said China had already recovered to pre-pandemic growth levels ahead of all major economies, although private consumption was still lagging behind in investment.
He said outside of China there were worrying signs of a widening gap between advanced economies and emerging markets.
The IMF predicts that accumulated per capita income in emerging and developing countries, excluding China, between 2020 and 2022 will be 22% lower than it would have been without the pandemic, which will push more people into poverty, he said. .
The overall outlook remained “exceptionally” uncertain, Okamoto said, adding that it was unclear how long the pandemic would last and access to vaccines remained very uneven, in both advanced and emerging economies.
Okamoto said some countries also had little room to increase spending to combat the pandemic and mitigate its economic impact, especially low-income countries with high debt levels.
He said tighter financial conditions could exacerbate the vulnerabilities of countries with high public and private debt, citing recent increases in bond yields sparked by market expectations of a previous withdrawal of monetary stimulus.
He said the crisis could also leave deep scars.
In the past, advanced economies had seen their output fall nearly 5% below pre-recession trends five years after the onset of a recession, and could be worse in countries that cannot afford a recession. strong macroeconomic response and / or that they had more service sectors. affected by the pandemic, he said.
Report by Andrea Shalal; Edited by Daniel Wallis