The world economy is recovering from the depths of the Covid-19 crisis. But that crisis will not depart for good until the pandemic is under control. Since the virus knows no frontiers, it cannot be under control anywhere unless it is under control everywhere. The alternative is for us to remain inside national prisons indefinitely. Alas, that is what we risk if leaders do not raise their gaze from their own countries.
In its January World Economic Outlook Update, the IMF projected global economic growth at 5.5 per cent this year and 4.2 per cent in 2022. Moreover, its “2021 forecast is revised up 0.3 percentage point relative to the previous forecast”. The global contraction in 2020 is also now thought to have been 0.9 percentage points less than previously expected. Still, it was the worst recession since the second world war and had especially devastating effects on women, the young, the poor, people employed informally and those working in contact-intensive sectors.
Losses relative to pre-pandemic expectations are large and likely to prove permanent. They will turn out to be a form of “long economic Covid”. As the World Bank’s Global Economic Prospects report notes, this is partly due to the damage done to investment and human capital. It is also due to the combination of pre-existing economic weaknesses with increased fragilities, especially the big jump in debt. One of the report’s chapters is entitled, “Heading into a Decade of Disappointment”. That is plausible and disturbing.