The global economic recovery risks splitting in two blocs – countries that have high levels of vaccinations and those that do not, the International Monetary Fund has warned.
The IMF says close to 40 per cent of the population in advanced economies has been fully vaccinated, compared with less than half that in emerging economies and a tiny fraction in low-income countries.
“Vaccine access is the principal fault line along which the global recovery splits into two blocs,” the IMF says in an update to its April 2021 World Economic Outlook.
“Those that can look forward to further normalisation of activity later this year – almost all advanced economies – and those that will still contend with prospects of resurgent infections and rising COVID death tolls.”
While an advanced economy, just 16 per cent of Australians have been fully vaccinated so far.
The Washington-based institution has kept its forecast for global growth at six per cent in 2021, but this reflects an upgrade to its predictions for advanced economies, offset by a downgrade for emerging and development economies.
For 2022 it forecasts world growth of 4.9 per cent, a 0.5 percentage point upgrade from its April outlook, again derived from the expansion among advanced economies, particularly in the US.
“The recovery, however, is not assured even in countries where infections are currently very low so long as the virus circulates elsewhere,” it says.
A slower-than-anticipated vaccine rollout that would allow the virus to mutate further is seen as a further downside risk to the outlook, as is central banks lifting interest rates too soon fearing growing inflation pressures.
“Clear communication from central banks on the outlook for monetary policy will be key to shaping inflation expectations and safeguarding against premature tightening of financial markets,” the IMF says.