The heads of the IMF, the World Bank group, the World Health Organisation, and the World Trade Organisation have called upon world leaders to invest $50bn in a plan to boost the world’s economies after covid-19.
The plan is predicted to be able to generate $9trn by 2025 by boosting manufacturing capacity, supply, and trade flows. This will be done alongside and through the equitable distribution of diagnostics, oxygen, treatments, medical supplies, and vaccines. Much of the detail for the roadmap is laid out in the IMF’s recent proposal.
In a joint statement, Kristalina Georgieva, Tedros Adhanom Ghebreyesus, David Malpass and Ngozi Okonjo-Iweala, the heads of the four organisations, said that there would be no broad-based recovery without an end to the health crisis.
It added: “At an estimated $50bn, it will bring the pandemic to an end faster in the developing world, reduce infections and loss of lives, accelerate the economic recovery, and generate some $9trn in additional global output by 2025. It is a win for all — while around 60% of the gains will go to emerging markets and developing economies, the remaining 40% will benefit the developed world. And this is without taking into account the inestimable benefits on people’s health and lives.”
Help thy neighbour to help thyself
The push follows a study by the International Chamber of Commerce that said the global economy will lose $9.2trn in value if governments fail to ensure developing countries gain access to covid-19 vaccines.
Key to avoiding this, said the ICC, is for developed, richer countries to provide aid and support to vaccinating their developing, poorer counterparts.
The authors wrote: “In the absence of global coordination, countries that successfully contain the virus will still struggle as long as the other countries do not contain it. Globalisation might have amplified the effects of the pandemic but it is also imperative for an equitable distribution of the vaccines because this is the only way for open economies with international linkages to have a robust recovery.”
Not just a developing market issue
Recent reports have said that economic recovery, even within Europe, will be irregular. In April, rating agency Moody’s said that Italy, Spain, and Portugal may see their recoveries ‘hamstrung due to rising unemployment’. The agency went on to say that relevant education and labour market policies were needed to address the issue.
The issue of vaccine privilege has also been raised. Also in April, Maarten-Jan Bakkum, senior emerging markets strategist at NN IP, said that the large differences between countries with regard to the pandemic explain some of the differences in equity and fixed income market performance.
Bakkum added: “The inability of most emerging market governments to contain the virus has been an important reason for our scepticism about EM recovery prospects and the outlook for EM equities, despite the strong global trade picture, steady upturn in China and rising commodity prices.”