The global economic recovery from the coronavirus pandemic remains "hobbled" by the virus and the world is "unable to walk forward properly," the head of the IMF said on Tuesday.
Assessing global economic outlook and policy priorities at an event hosted by Bocconi University in Italy ahead of the fall meetings of the IMF and World Bank, Kristalina Georgieva
said the risks and obstacles to a balanced global recovery were now even more pronounced.
"The most immediate obstacle is the ‘Great Vaccination Divide’ -- too many countries with too little access to vaccines, leaving too many people unprotected from COVID," she said.
Countries, she added, remain deeply divided in their ability to respond, to support the recovery, and to invest for the future.
With the global economy projected to grow by 6% in 2021 as of July, she noted that they expected growth to be slightly more moderate this year.
"Economic output in advanced economies is projected to return to pre-pandemic trends by 2022. But, most emerging and developing countries will take many more years to recover," Georgieva said, warning that this delayed recovery would make it even more difficult to avoid long-term economic scarring.
- Inflation prospects uncertain
The IMF chief also said headline inflation rates had risen rapidly in a number of countries. "While we do expect price pressures to subside in most countries in 2022, in some emerging and developing economies, price pressures are expected to persist."
Together with rises in energy prices, this is putting further pressure on poorer families, she noted.
"More generally, inflation prospects remain highly uncertain," noted Georgieva, adding that a more sustained increase in inflation expectations could cause a rapid rise in interest rates and a sharp tightening of financial conditions.
This would pose a particular challenge for emerging and developing economies with high debt levels, she concluded.