International community must act to avert a two-speed global economic recovery post Covid-19-AfDB
International community must act to avert a two-speed global economic recovery post Covid-19-AfDB
Heads of international development institutions held a closed-door session with German Chancellor Angela Merkel on Thursday to discuss the uneven global economic recovery, access to vaccines, and strategies to drive a recovery from the Covid-19 crisis.
Merkel was joined by the heads of the African Development Bank, World Trade Organization, the International Monetary Fund (IMF), the World Bank, the Organisation for Economic Cooperation and Development (OECD), and the International Labour Organization (ILO).
“We have noted that the recovery after the pandemic is a two-speed recovery, which is cause for concern,” Chancellor Merkel said.
The German leader added that the G7, IMF and World Bank continued to take measures to assist lower- and middle-income countries. She mentioned the IMF Special Drawing Rights and the importance of channeling them in a way that benefits the world’s poorest countries.
Highlighting the IMF’s projection of 6% global growth in 2021, IMF Managing Director Kristalina Georgieva said: “The composition of the 6% is changing, with advanced economies broadly accelerating growth, whereas most emerging markets and developing economies are falling further behind. This is a dangerous divergence.”
The consequences of the disparity include continuing supply chain disruptions and the risk of giving up hard-won gains in development, which would fuel unrest and instability.
Georgieva concluded that vaccines remain the number one priority today. World Bank President David Malpass reiterated this. He said progress had been made under the African Vaccine Acquisition Trust (AVAT) initiative of the Africa Centres for Disease Control and Prevention, but that advanced economies still need to make doses available to the rest of the world.
On debt relief, Malpass said: “I have actively advocated for more transparency with regard to debt, as well as a greater balance within the debtor/creditor relationship around the world.”
Addressing Africa’s economic prospects, African Development Bank President Akinwumi A. Adesina said the continent’s economies were forecast to grow by 3.4%. He said the IMF special drawing rights were invaluable in facing down economic headwinds. “The recent IMF release of $650 billion in SDRs, with $27 billion to Africa, will go a long way in helping to boost reserves for developing countries,” he said. He added: “If the developed countries reallocate $100 billion of SDRs to Africa, as agreed at the Paris leaders meeting and by the G7, that will further support faster economic recovery in Africa.”
ILO Director General Guy Ryder said the impact of the pandemic on labour markets was four times greater than the 2008-2009 financial crisis. “We’ve recovered perhaps half of the damage done in terms of work being done, but all of us agree that the recovery process is incomplete, uneven and fragile,” Ryder said.
The institutional heads included messages of praise and farewell for the outgoing chancellor’s leadership on her thirteenth and final sit-down as head of state with them.
The meeting took place a day before a Compact with Africa conference, which several African heads of state are attending. The Compact with Africa is a G20 initiative that promotes private investment in Africa. It involves reform of the continent’s macroeconomic, business and financing frameworks.
