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Economy

Interview: IMF official stresses closer multilateral cooperation amid uneven global recovery

January 28, 2021


Abstract : A senior official of the International Monetary Fund (IMF) on Tuesday stressed the importance of closer multilateral cooperation amid uneven global recovery from the COVID-19 pandemic.

by Xinhua writers Gao Pan, Xiong Maoling, Tan Yixiao

WASHINGTON, Jan. 26 (Xinhua) -- A senior official of the International Monetary Fund (IMF) on Tuesday stressed the importance of closer multilateral cooperation amid uneven global recovery from the COVID-19 pandemic.

"We are seeing very diverging prospects across the world, and at the same time when it comes to the health aspect of it, the global economy is as strong as its weakest link," Petya Koeva Brooks, deputy director of the IMF's Research Department, told Xinhua in an interview, after the IMF released the latest update of its World Economic Outlook (WEO).

The IMF projected that the global economy will grow by 5.5 percent in 2021, 0.3 percentage point above its October forecast, following an estimated contraction of 3.5 percent in 2020.

However, there is a great deal of uncertainty around this forecast as global COVID-19 cases surpassed 100 million Tuesday, breaking yet another grim record, according to a tally from Johns Hopkins University.

The resurgence of the virus, including the likelihood of new lockdown measures and the negative impact on economic activity, is perhaps "one of the most important risks in the near term on the downside," Brooks said.

Other downside risks include a sharp tightening in financial conditions and the slower rollout of the vaccination across countries than current expectations, while upside risks include faster progress with vaccinations and additional fiscal support in some countries, according to Brooks.

"At this stage, we would like to emphasize the uncertainty rather than coming up with the bottom line on which risks dominate," Brooks said, urging countries to accelerate vaccination "so that this race between the virus and the vaccine is one in the favor of the vaccine."

"Having universal access to vaccines for all countries is something that is going to benefit everyone. This is where multilateral cooperation would be particularly important," she said.

Faster progress on ending the health crisis will raise global income cumulatively by 9 trillion U.S. dollars over 2020-25, with benefits for all countries, according to the IMF's estimation.

Besides public health, multilateral cooperation on climate change and resolving debt issues is also important for the global economy "to grow and to be better going forward," Brooks said.

Meanwhile, the IMF official noted that there are a lot of divergences across economies in the post-pandemic recovery.

The Chinese economy has already reached the level of output that it had prior to the pandemic, while the United States and Japan are expected to reach the pre-pandemic level of output this year, Brooks said.

The euro area as well as many emerging markets and developing countries will not reach this level until 2022, with some of the low-income countries even beyond that, she said.

Brooks also noted that preserving the relationship between the employer and the worker would be very helpful for countries to reduce scarring effects of the pandemic.

"Many governments have implemented schemes to provide support for short-time work programs and such, and more generally targeting the sectors that have been most effected is an important aspect of that," she said.

China's economy is expected to grow by 8.1 percent in 2021 from 2.3 percent in 2020, according to the IMF's forecast.

Brooks attributed China's fast recovery from the pandemic to "very strong containment efforts" as well as "very strong" support of fiscal policy and monetary policy.

Calling China "the engine of growth for the global economy for a while," Brooks believed China has a very important role to play in the global recovery going forward.

"I think the fact that China is one of the producers of the vaccine and has been active and willing to also help others is an important thing," she said, adding it would be important for China to be one of the champions of global multilateral cooperation on the vaccine front.

China also plays a critical role in strengthening global supply chains, addressing climate change and resolving debt issues, said the IMF official. "China can do a lot in terms of being again the catalyst or the champion for change at the global level."  Enditem

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