WASHINGTON — The global economy is rebounding from the coronavirus pandemic faster than previously expected, largely thanks to the strength of the United States. But the International Monetary Fund warned on Tuesday that an uneven rollout of vaccines posed a threat to the recovery, as the fortunes of rich and poor countries diverge.
The global dynamic echoes the “K-shaped” recoveries that are playing out worldwide. While many wealthy nations are poised for a major economic expansion this year, other nations’ struggles could reverse decades of progress in fighting poverty. Top international economic officials warned this week that this divergence, which is being amplified by sluggish deployment of vaccines in developing countries, is a threat to stability and long-term growth.
“Economic fortunes within countries and across countries are diverging dangerously,” Kristalina Georgieva, managing director of the I.M.F., said at a panel discussion on Tuesday during the annual spring meetings of the fund and the World Bank.
This week, Treasury Secretary Janet L. Yellen emphasized that point, saying in a speech that the inability of low- and middle-income countries to invest in robust inoculation programs could result in “a deeper and longer-lasting crisis, with mounting problems of indebtedness, more entrenched poverty and growing inequality.”
upgrading its global growth forecast for the year thanks to vaccinations of hundreds of millions of people, efforts that are expected to help fuel a sharp economic rebound. It now expects the global economy to expand by 6 percent this year, up from its previous projection of 5.5 percent, after a contraction of 3.3 percent in 2020.
The wealthiest countries are leading the way out of the crisis, particularly the United States, whose economy is now projected to expand by 6.4 percent in 2021. The euro area is expected to expand by 4.4 percent and Japan is forecast to expand by 3.3 percent, according to the I.M.F.
Among emerging market and developing economies, China and India are expected to drive growth. China’s economy is projected to expand by 8.4 percent, offering its own significant boost to overall global growth, and India’s is expected to expand by 12.5 percent.
But within advanced economies, low-skilled workers have been hit the hardest and those who lost jobs could find it difficult to replace them. And low-income countries are facing bigger losses in economic output than advanced economies, reversing gains in poverty reduction and risking long-lasting pandemic-era scars.
Emerging market economies in many cases have fewer resources for fiscal stimulus, vaccine investments and labor force retraining — factors that put them at risk of falling behind and getting stuck as the world starts its rebound.
Researchers at the I.M.F. pointed out in a recent blog post that it was important that rates on U.S. debt are rising because of a strengthening economic outlook, one that will benefit many economies by stoking demand for their exports. Still, “countries that export less to the United States yet rely more on external borrowing could feel financial market stress.”
Most U.S. officials have focused on how stronger domestic growth could actually help the rest of the world as American consumers buy foreign goods and services. “This year the U.S. looks like it’s going to be a locomotive for the global economy,” Richard H. Clarida, the vice chair of the Fed, said during a recent speech.
Ms. Yellen made a similar argument on Tuesday during a panel discussion at the I.M.F., at which she urged countries not to let up on fiscal support.
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“Stronger growth in the U.S. is going to spill over positively to the entire global outlook and we are going to be careful to learn the lessons of the financial crisis, which is ‘don’t withdraw support too quickly,’” she said.
There are risks that spillovers could work the other way — slower vaccination progress abroad could come to weigh on American and global improvement. While roughly 500 doses of the vaccine have been administered per 1,000 people in the United States, based on New York Times vaccination data, that number is about 1 per 1,000 in Mali and Afghanistan.
Economist Intelligence Unit.
“There’s a race right now between these variants of concern and vaccines,” she said during a webcast event Tuesday. She urged “global cooperation and attention” to how disparities in vaccine distribution affect inequality and economic recoveries.
The I.M.F. agrees. Vitor Gaspar, the fund’s director of fiscal affairs, said that advanced economies would continue to be at risk even if the virus were raging in developing countries that are not major economic powers, noting that the virus cannot be eradicated anywhere until it is eradicated everywhere. For that reason, he said, investing in vaccinations is critical.
“Global vaccination is probably the global public investment with the highest return ever considered,” Mr. Gaspar said in an interview. “Vaccination policy is economic policy.”
While global policy bodies are warning about diverging growth and public health outcomes, some Wall Street economists have taken a more optimistic tone.
“We think market participants underestimate the likely pace of improvement in both the public health situation and economic activity in the remainder of 2021,” Jan Hatzius at Goldman Sachs wrote in an April 5 research note.
Vaccinations are high or progressing in Canada, Australia, Britain and the euro area. In emerging markets, Mr. Hatzius wrote, Goldman economists expect 60 to 70 percent of the population to have “at least some immunity” by the end of the year when counting prior coronavirus infection and vaccine proliferation.
“The laggards are China and other Asian countries, although this is mainly because Asia has been so successful in virus control,” he wrote.
How fast global recoveries proceed could be critical to the policy outlook, both in government support spending and in central bank monetary help.
From the Fed to the European Central Bank and Bank of Japan, monetary authorities have employed a mix of rock-bottom rates, huge bond purchases and other emergency settings to try to cushion the pandemic’s fallout.
Organizing bodies have echoed Ms. Yellen’s comment: They argue that it’s important to see the recovery through, rather than pulling back on economic help early.
Global policymakers “generally view the risks to financial stability associated with early withdrawal of support measures as currently greater than those associated with a late withdrawal,” Randal K. Quarles, the Federal Reserve’s vice chair for supervision and head of the global Financial Stability Board, said in a letter released Tuesday.
The I.M.F. said on Tuesday that it was keeping a close eye on interest rates in the United States, which could pose financial risks if the Fed raises them unexpectedly. It also urged countries to maintain targeted fiscal support — and to be ready to provide more if future waves of the virus emerge.
“For all countries, we’re not out of the woods, and the pandemic is not over,” said Gita Gopinath, the I.M.F.’s chief economist.
The news about the state of the pandemic in the U.S. has been largely positive in the past few months. The vaccines are highly effective, and millions of people are receiving doses each day. Cases, hospitalizations and deaths have fallen sharply from their January peaks.
But infections are rising again. The U.S. has averaged 65,000 new cases a day over the past week — a 19 percent increase from two weeks ago. That puts the country close to last summer’s peak, though still far below January levels.
aren’t surprised. “For literally a month and a half, we’ve all been predicting that the second half of March is when B.1.1.7 would become the dominant variant in the United States,” says Dr. Ashish Jha, dean of the Brown School of Public Health. “And sure enough, here we are.”
The increase is not distributed equally. “New York and New Jersey have been bad and are not getting better, and Michigan’s cases are rising at an explosive rate,” Mitch Smith, a Times reporter covering the pandemic, said.
Hospitalizations are also rising rapidly in Michigan, with Jackson, Detroit and Flint among the metro areas experiencing the highest rates of new cases in the country.
The outlook is more encouraging in much of the West and South, though cases have started to tick up in Florida, where officials in Miami Beach instituted a curfew this month to prevent crowds of spring breakers from gathering.
while warning that “reckless behavior” could lead to more infections.
The solution, Jha believes, is honesty. “There’s been this debate throughout the whole pandemic: Should we be more optimistic or should we be more pessimistic? My personal strategy has been to just be honest with people,” he says. “Be honest with people and give it to them straight. I think most people can handle it.”
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P.S. President Lyndon Johnson announced he would not run for re-election 53 years ago today, the last time a U.S. president has done so. The Times covered the news with a front-page banner headline.
DAKAR, Senegal — They had gathered for a wedding in a village in central Mali.
The ceremony took place the day before, but about 100 men and teenagers were still celebrating the next afternoon. They prayed together, then dispersed into different groups under some trees.
An hour later, 22 members of the wedding party were dead, killed by French warplanes. Nineteen of them were civilians, according to a report released Tuesday by the United Nations.
The Jan. 3 airstrike set off outrage in the West African country, and has intensified calls for France, which has more than 5,000 troops stationed in the region, to leave.
Soon after the airstrike on the village of Bounti reports began to emerge that a wedding had been hit. France immediately dismissed any suggestion that its planes had attacked a wedding party, or that there had been any collateral damage.
has dragged on for years with no end in sight. Just last week, French troops were accused of killing more civilians, this time in northern Mali. France said they were terrorists; a local mayor said they were teenagers hunting birds.
The report called for France and Mali to carry out their own investigations into what happened at the wedding and pay compensation to the victims.