As Group of Twenty (G20) finance ministers and central bank governors are set to gather later this week, the International Monetary Fund (IMF) has called for urgent action to address a worsening "two-track" recovery.
"The world is facing a worsening two-track recovery, driven by dramatic differences in vaccine availability, infection rates, and the ability to provide policy support," IMF Managing Director Kristalina Georgieva wrote in a blog on Wednesday, noting that it is a "critical moment" that calls for urgent action by the G20 and policymakers across the globe, Xinhua reported.
According to IMF estimation, faster access to vaccinations for high-risk populations could potentially save more than half a million lives in the next six months alone.
Low vaccination rates mean that poorer nations are more exposed to the virus and its variants, Georgieva said. In sub-Saharan Africa, for example, less than one adult in a hundred is fully vaccinated, compared to an average of over 30 per cent in more advanced economies.
"Unvaccinated populations anywhere raise the risk of even deadlier variants emerging, undermining progress everywhere and inflicting further harm on the global economy," she continued.
The IMF chief also noted that shrinking fiscal resources will make it even harder for poorer nations to boost vaccinations and support their economies, which will leave millions of people unprotected and exposed to rising poverty, homelessness, and hunger.
Noting that inflation expectations in the US have been stable so far, Georgieva also warned that there is a risk of a more sustained rise in inflation or inflation expectations, which could potentially require an "earlier-than-expected tightening" of US monetary policy.
"Higher interest rates in the US could lead to a sharp tightening of global financial conditions and significant capital outflows from emerging and developing economies," she said. "It would pose major challenges especially to countries with large external financing needs or elevated debt levels."
In order to address this worsening two-track recovery, the IMF chief urged G20 policymakers to step up international cooperation to end the pandemic, step up efforts to secure the recovery, and step up support to vulnerable economies.
IMF staff recently outlined a $50 billion plan that could lead to trillions of dollars gained from faster vaccine rollout and accelerated recovery. "This would be the best public investment of our lives and a global game-changer," Georgieva said.
