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In recent months, the IMF has joined the World Health Organization, the World Bank, and World Trade Organization in urging the wider deployment of vaccines across the developing world to close the gap between richer and developing nations in response to the ever-increasing spread of more aggressive variants of the COVID-19 Sars Cov-2 virus.
The world economy risks losing $4.5tn from highly infectious variants of Covid-19 spreading through poor countries where vaccination rates are lower, the International Monetary Fund has warned.
Calling on rich countries to take urgent action to share at least 1bn doses with developing nations, or risk severe economic consequences, the Washington-based fund said the gap between rich and poor economies had widened during the pandemic and risked worsening further next year.
While wealthier countries have seen a speedy rollout of vaccines which improved their economic outlook in wealthier countries, as is the case with the UK, low-income countries have seen growth and recovery rates depressed by a chronic lack of resources to improve vaccination rates that would contribute to the reopening of their economies.
Charting the downside risk scenario in its six-monthly health check of the global economy, the IMF said the new coronavirus variants would wipe $4.5tn from global GDP by 2025 with the potential for more than two-thirds of that loss falling on middle- and low-income countries.
The IMF said financial markets could be thrown into panic if the virus was believed to be spreading out of control, restricting lending and investment, and lowering the potential for growth over many years.
While such a turn of events would hurt the outlook for rich countries, the IMF’s chief economist, Gita Gopinath, said: “A worsening pandemic and tightening financial conditions would inflict a double hit on emerging market and developing economies and severely set back their recoveries.”
In recent months, the IMF has joined the World Health Organization, the World Bank and World Trade Organization in urging the wider deployment of vaccines across the developing world.
The report said that close to 40% of the population in advanced economies had been fully vaccinated, compared with 11% in emerging market economies and a small fraction in low-income developing countries.
Gopinath said: “Multilateral action is needed to ensure rapid, worldwide access to vaccines, diagnostics, and therapeutics. This would save countless lives, prevent new variants from emerging, and add trillions of dollars to global economic growth.”
The IMF’s most recent proposal to end the pandemic sets a goal of vaccinating at least 40% of the population in every country by the end of 2021 and at least 60% by mid-2022 at a cost of $50bn. “At the end of June 2021, the pace of daily global vaccinations stood at about 40m doses a day, with China alone accounting for more than 20m of those daily doses,” the report said.
“High-income countries account for 7m doses a day. By contrast, fewer than 100,000 doses a day are being administered in low-income countries.
IMF World Economic Outlook: economic inequality has led to unequal access to vaccines which will further increase global economic inequalities if vaccine access is not made more equitable pic.twitter.com/K1cgViLXkl
“Vaccine supplies and deliveries to low- and lower-middle-income countries must increase sharply to meet the proposal’s targets. In close to half of countries recent daily vaccination rates fell below the rate needed to meet the 40% target by the end of 2021.”
On its central forecasts, the IMF said the global economy was still on track to grow by 6% in 2021, unchanged from its most recent spring health check. However, it warned fault lines were widening between rich and poor countries – with dramatic results for the shape of the economic fightback from Covid-19.