IMF Flags Divergent Recovery Paths Between Advanced Economies And Low-Income Countries

The divergent recovery paths between advanced economies and the rest of the world is likely to create wider gaps in living standards across countries, the International Monetary Fund said in a post.

• Advanced economies are expected to have an average annual loss in per capita GDP of 2.3% over 2020 to 2024, smaller than the 5.7% losses expected in low-income countries, and 4.7% in emerging markets.
• Such losses are reversing gains in poverty reduction. An additional 95 million people are expected to have fallen into the “extreme poor” in 2020 compared with pre-pandemic projections.
• Uneven recoveries are also occurring within countries, as young and lower-skilled workers are more heavily affected. Women were also affected more especially in emerging markets and developing economies.
• Policy makers will need to continue supporting their economies through better-targeted measures to leave space for prolonged support, if needed. A tailored approach is necessary, with policies well-calibrated to the stage of the pandemic and the strength of the economic recovery.