Financial Times: Countries with low immunization rates, like Argentina, will experience weak economic recovery

Countries experiencing a strong new wave of COVID-19 and a slow vaccination rate, like Argentina, will face a weak economic recovery after the collapse of 2020.

This was underlined by the composite index from the prestigious think tank Brookings Institution and the British newspaper Financial Times.

In this direction, The most powerful weapon to drive the economic rebound will be the ability of each country to control the coronavirus epidemic.

The report concluded that the more developed economies will outperform the emerging economies in terms of finance, growth and investor confidence.

This situation responds to a new wave of pandemic in several countries, which makes it difficult to coordinate a global economic recovery and will lead to an uneven rate of rebound, according to this analysis known before finance ministers and central bank leaders do carry this week, a virtual meeting of the International Monetary Fund (IMF) and the World Bank.

In this regard, the studies highlight that Different economic perspectives may add tension to current battles over vaccine production and distribution.

“The world economy faces a sharp divergence in growth prospects in various regions”, he pointed Eswar Prasad, from the Brookings Institute.

“The global economy faces widely divergent growth prospects from region to region as the prospects for a rapid and uniform resurgence have been clouded after a bleak 2020,” he said.

The global economy faces widely divergent growth prospects from region to region, as prospects for a rapid and steady recovery have darkened after a bleak 2020.

The Brookings-Financial Times’ Global Economic Recovery Tracking Index (TIGER) update “reveals reasons for optimism about global growth prospects, but also renewed concern about obstacles to a strong recovery.”

“Vaccine euphoria and hopes for a rapid and widespread recovery have been dampened by a new wave of COVID-19, sweeping several economies and jeopardizing their growth trajectories,” they warned.

About, The United States and China “are emerging as the main engines of global growth in 2021”.

“Household consumption and business investment increased in both economies, as did private sector confidence building measures. Industrial production has rebounded in most countries, which has contributed to firm commodity prices and strength in international trade, ”the report said.

However, “The United States, China and India will likely be the only major economies (along with Indonesia and South Korea) to surpass pre-crisis GDP levels of 19 through the end of 2021 ”. “In most other regions, the effects of the 2020 recession on GDP and employment are likely to be longer lasting,” they admitted.

In particular, it was noted that the US economy “is set for a year of strong growth, as huge fiscal stimulus, flexible monetary policies and suppressed demand lead to rapid GDP growth.”

“The rebound in consumer and business confidence has translated into strong growth in consumption and business investment, while financial markets have continued to perform well,” they said.

“The labor market performance has been encouraging, although progress in job growth and unemployment reduction has been uneven in recent months.”

At the same time, “separating the impending phantom rise in inflation (due to the base effects of a weak year 2020) from the underlying pressures on wages and prices will complicate monetary policy in 2021”.

“Analysis of rising public debt yields – which reflects a combination of better growth prospects, inflation risks and concerns about rising debt levels – sums up the challenges facing policymakers. of monetary policy when trying to decipher and manage market expectations, ”they said.

“Ideally, any additional stimulus should be aimed simultaneously at boosting aggregate demand and improving productivity in the long run,” the authors suggested.

“China’s growth momentum has remained strong and balanced, and the government’s attention has focused on medium-term structural issues and on containing risks to the financial system,” they said.

“The recent meeting of the National People’s Congress concluded with renewed interest in rebalancing demand towards household consumption and shifting sources of growth to high-end manufacturing, the service sector and small and medium-sized enterprises, ”they added of China.

“The government seems to favor the normalization of macroeconomic policies, with a lower budget deficit and some tightening of monetary policy expected by the end of the year.”

However, they warned that “It seems likely that trade tensions with the United States will persist under the Biden administration, but this no longer appears to be a major factor influencing sentiment or private sector growth in both countries.“.

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