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.