World economy faces fast but uneven recovery – leading macroeconomic influencers
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World economy faces fast but uneven recovery – leading macroeconomic influencers

10 Jun 2021 (Last Updated June 10th, 2021 07:41)

While the global economy is expected to remain about 2% below where it would have been without the pandemic by 2022, poorer countries are lagging behind due to slow Covid-19 vaccine progress and debt burdens.

World economy faces fast but uneven recovery – leading macroeconomic influencers
Credit: FrankHH, Shutterstock.com.

The World Bank calls for a wider distribution of Covid-19 vaccines to low-income economies, citing that policymakers will need to address the lingering effects of the pandemic and take urgent steps for a green, inclusive, and resilient recovery.

John Ashcroft

John Ashcroft, a lawyer and former governor of Missouri and attorney general in the Bush administration, shared an article on the World Bank’s predictions of the global economy set for the fastest recession recovery in 80 years.

However, the institution also believes that slow Covid-19 vaccine distribution and access in low-income countries will further widen the gap between rich and poorer nations.

Consequently, the institution stated that the global economy will grow at 5.6% in 2021, compared to previous estimates of a 4.1% growth rate. It also asserted that this rapid post-Covid recession recovery will be fuelled by the growth in some major economies who have made swift progress in vaccinations, leading to reopening across sectors of the economy.

The Bank has however sent warning signs of an uneven recovery, indicating that only one-third of the low-income nations will be able to return to their re-pandemic levels of GDP compared to 90% of the richer nations.

Greg Ip

Greg Ip, chief economics commentator for The Wall Street Journal, shared an article on the US currently witnessing a productivity boom, but the job outlook is not too satisfactory with employers concluding that they are meeting their sales with less hiring. The Covid-19 pandemic and labour shortages have driven businesses to change their business models and intensify the use of technology to squeeze in more sales with the same staff, sustain GDP and wages, while employment lags.

Experts state that industries such as retail, finance, construction, information, and professional and business services, which accounted for nearly one-third of the job loss in the US since the start of the pandemic have increased their output.

Unlike normal recessions where the productivity first dips and rebounds with hiring, the Covid downturn has revealed unusual patterns, one that is dependent on remote and technology. Experts believe that continued labour shortages will inflict upward pressure on wages, compelling organisations to digitise faster and taking longer for employment to recover.

Kate Raworth

Kate Raworth, economist working at the University of Oxford and the University of Cambridge, shared an article on the need for G7 countries to commit to shifting their financing out of fossil fuels in 2021. She and other fellow economists believe that G7 leaders should end not just coal, but also oil and gas financing this year to meet the climate goals of the Paris Agreement and a green pandemic economic recovery.

Economists believe that it is time for G7 members to invest in clean energy to address climate issues, as part of a greater resilient, green and inclusive recovery while countries inject large sums of money into their economies to battle the pandemic. The UK has already taken important steps and has halted new financing in overseas fossil fuels projects as well, a first and is therefore in a unique position to meet the collective goal of equitable green pandemic transition.