Fighting pandemic will accelerate economic recovery and reduce inflation, says IMF

The Covid-19 pandemic remains the biggest risk to the global economy and is contributing to rising inflation in many countries, IMF (International Monetary Fund) Managing Director Kristalina Georgieva said on Wednesday (2) .

Georgieva called for redoubled efforts to boost vaccination and bolster defenses against the coronavirus, saying this would help alleviate supply chain disruptions and fight inflation, along with interest rate hikes now being embraced by central banks.

“Pandemic policy is economic policy,” she said. “The biggest risk to the performance of the world economy remains, this year, Covid and the disruptions it causes.”

The IMF chief conceded that inflation turned out to be a “more significant economic and social problem” than expected, and said economists had underestimated the impact of pent-up consumption and climate shocks on food prices.

Georgieva highlighted that vaccination rates in 86 countries have not reached the target of at least 40% of their populations in 2021, and that they are only 5% in low-income countries, against rates of 70% of the population vaccinated in rich countries. .

“Why is this a problem? Because what we’re doing is maintaining fertile ground for more and more variants of Covid,” she said at an event hosted by the Washington Post.

The IMF chief said disruptions to global supply chains, which were initially expected to be brought under control as early as the first half of 2022, are likely to continue because of Covid restrictions and other factors, including much higher demand for consumer goods such as computers. and cars.

She warned that the conflict between Russia and Western countries over Ukraine was already driving up energy prices, particularly in Europe, and complicating the already uncertain picture for the global economy.

The IMF has underestimated the impact of climate change on food prices, she said. “We need to recognize that we are in a world more prone to shocks, and we have to hope that these types of shocks will be a factor in the future,” he said.