Covid recovery is like ‘walking with stones in our shoes’, says IMF

Recovering from the pandemic is like ‘walking with stones in our shoes’, warns IMF boss

Recovering from the Covid pandemic is like ‘walking with stones in our shoes’, the head of the International Monetary Fund has warned.

Kristalina Georgieva said the global bounce-back has been ‘hobbled’ by rising inflation, soaring debt and divergence in economic growth.

And while emerging and developing economies would be most hamstrung, Georgieva said, advanced nations such as the UK may also face difficulties as the momentum of their recovery slows.

Growth threat: IMF boss Kristalina Georgieva said the global bounce-back has been ‘hobbled’ by rising inflation, soaring debt and divergence in economic growth

Speaking ahead of the IMF’s annual meetings, Georgieva said: ‘We face a global recovery that remains hobbled by the pandemic and its impact. We are unable to walk forward properly – it is like walking with stones in our shoes.’ 

The comments came as Georgieva faces a grilling from the IMF over claims from law firm Wilmer Hale that she manipulated data to boost China’s ranking in a World Bank report when she was chief executive of that organisation.

But in a speech that steered clear of the allegations, Georgieva noted that the most immediate global hurdle was the ‘great vaccination divide’ as many poorer countries are still struggling to buy enough supplies to inoculate their population.

The IMF has urged wealthier nations to donate some jabs, and deliver on those promises immediately so at least 40 per cent of those in every country might be vaccinated by the end of the year.

But other factors are also holding back the recovery, and where the IMF in July had projected global growth of 6 per cent for 2021, its World Economic Outlook next week will show growth is set to ‘moderate slightly’ this year.

‘The United States and China remain vital engines of growth even as their momentum is now slowing,’ Georgieva said.

‘By contrast, in many other countries, growth continues to worsen, hampered by low access to vaccines and constrained policy response, especially in some low-income nations. And this divergence in economic fortunes is becoming more persistent.’

Even in the UK, which has double-vaccinated the majority of its population, there are increasing worries that growth has slowed in recent months, squeezed by rising prices, labour shortages and a fuel crisis. 

Inflation, or a jump in the cost of living, was becoming a widespread problem, Georgieva said.

She urged central bankers and governments to make sure they were making policies tailored to the circumstances in their countries, and to invest more in ‘green’ infrastructure and digital technology to ‘accelerate the reforms needed to transform economies’.

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