Global economy faces a hard road back from pandemic onslaught
The global economy faces a hard road back from the COVID-19 downturn, and nations should remove trade barriers on medical technologies to aid the recovery, the IMF chief said on Thursday.
The call from Managing Director Kristalina Georgieva ahead of this week’s G20 leaders summit comes as countries grapple with the fallout from a pandemic that has killed hundreds of thousands and caused a sharp contraction in growth.
“While a medical solution to the crisis is now in sight, the economic path ahead remains difficult and prone to setbacks,” Georgieva said in a blog post.
Major pharmaceutical companies are now closing in on vaccines against the virus, amid a global spike in cases that has caused some countries to reimpose restrictions to curb transmission.
“The resurgence in infections is a powerful reminder that a sustainable economic recovery cannot be achieved anywhere unless we defeat the pandemic everywhere,” Georgieva said.
She called for countries to cooperate to ensure an adequate supply of vaccines, tests and medicines, as well as “multilateral efforts on the manufacturing, purchase and distribution of these health solutions -- especially in poorer nations.
It also means removing recent trade restrictions on all medical goods and services, including those related to vaccines,” Georgieva said.
The COVID-19 pandemic has caused more than 1.3 million deaths worldwide, according to an AFP tally, and wreaked a grievous toll on the global economy.
The IMF expects global growth to contract by 4.4 percent this year before rebounding 5.2 percent in 2021. However, Georgieva noted third-quarter growth was beter than expected in the United States, Japan and European countries.
The virtual summit hosted by Saudi Arabia is set to be the last during the term of US President Donald Trump, who lost his bid for another four years in office earlier this month, though he has rejected the results.
Under his leadership, Washington has engaged in trade conflicts with strategic rival China as well as its European allies, which slowed down global growth even before the virus’s arrival.
In a separate research note, the IMF called for countries to work together to finish the pandemic off.
“Combining well-coordinated national policies with joint measures at the global level will help ensure a strong, sustainable recovery,” the Washington-based crisis lender said.
“In the immediate term, the G20 should refrain from imposing or intensifying trade restrictions and promptly remove those put in place since the start of the year on all medical goods and services as well as on any goods and services related to vaccine manufacturing and distribution.”
The IMF called for Britain and the European Union to conclude a trade deal that would forestall new trade barriers as London disentangles itself from the regional bloc.
The lender also reiterated its call for more public spending to help countries escape the growth slowdown and reshape their economies for both growth and to fight climate change.
Meanwhile, The WTO’S latest Trade Monitoring Report on G20 trade measures shows a slowdown in the number and coverage of traderestrictive and trade-facilitating measures on goods implemented by G20 countries between mid-may and mid-october 2020, primarily as a result of the sharp decline in overall global trade since the COVID-19 outbreak. The report also documents numerous trade-facilitating and support measures introduced by G20 economies in response to the economic downturn in order to prepare the ground for a strong economic recovery.
The trade coverage of ‘regular’ import-facilitating and import-restrictive measures introduced during the five-month period, that is those unrelated to the COVID-19 pandemic, dropped to $ 36.8 billion ( down from $735.9 billion in the previous period) and $ 42.9 billion (down from $417.5 billion) respectively. This was a function of the sharp decline in overall global trade flows, the diversion of governments’ atention towards pandemic response, and relative stasis in major bilateral trade tensions that had elevated both sets of figures in earlier reporting periods as well as a general commitment to keep trade flowing.
At the same time, trade measures directly tied to the pandemic covered a significant amount of global trade. COVID-19 related trade-facilitating measures on goods implemented since January covered trade worth an estimated $155 billion, while pandemic-related trade-restrictive measures most of which were export controls covered trade worth $111 billion. Of the 133 COVID-19 trade and trade-related measures recorded for G20 economies since the outbreak of the pandemic, 63 percent were of a trade-facilitating nature and 37 percent were trade restrictive.
Almost three out of every ten COVID-19 restrictive measures on goods taken by G20 economies had been repealed by mid-october. Most of them were export restrictions. In the services sectors heavily impacted by the pandemic, most of the 68 COVID-19 related measures adopted by G20 economies appeared to be trade facilitating.
The IMF expects global growth to contract by 4.4% this year before rebounding 5.2% in 2021. However, Georgieva noted Q3 growth was beter than expected in the US, Japan and European countries