Global virus resurgence threatens vigorous growth momentum

Find out what moves the global economy in the new season of the Stephanomics podcast. Register via Apple Podcast, Spotify or Pocket Cast.

The renewed rise in Covid-19 infections threatens to further divide the global economy between rich and poor, potentially damaging overall global growth if the new outbreaks spread or if key sources of demand falter.

More people were diagnosed Covid-19 last week than any other since the pandemic began. The World Health Organization warned this week that new infections are on the rise everywhere except Europe, led by rising numbers in India as well as Argentina, Turkey and Brazil.

That casts a shadow over a previously vigorous global economic boom, as being unable to control the virus or distribute vaccines evenly risks causing new mutations, first in emerging markets and then in developed countries. the pandemic.

Even if it doesn’t, a two-speed recovery will slow even inoculated countries by limiting foreign demand for their goods and destabilizing supply chains. The International Monetary Fund said last month that the recovery will miss out on a $ 9 trillion rise by 2025 unless more rapid progress is made in ending the health crisis.

Global rebound

The IMF predicts growth in 2021 will be the highest since at least 1980

Source: International Monetary Fund


Emerging and Developing Economies accounts for two-thirds of global pre-pandemic growth and about 86% of the world’s population. The World Bank told them this week that they should prepare for the possibility of their recovery losing steam. A burgeoning economic resurgence in India – the world’s sixth largest economy – is threatened by renewed movement restrictions in the provinces to stem a new wave of infections. more than 200,000 a day during the past week.

“The new peaks in the case represent a reality check for the global economy, as it is clear that the pandemic is far from over,” said Tuuli McCully, Scotiabank’s Asia Pacific chief of economics. “Many lower-income economies are still facing serious Covid-19-related challenges and have a long way to go to return to ‘normal’.”

California is expanding the suitability of the Covid-19 vaccine to all adults

Health workers prepare to administer Covid-19 vaccines to residents at a vaccination site in Richmond, California, April 15.

Photographer: David Paul Morris / Bloomberg

According to Bloomberg data, more than 944 million vaccinations have been administered in 170 countries – enough doses for 6.2% of the world’s population. But the distribution is skewed with the countries with the highest incomes vaccinated about 25 times faster than those with the lowest.

“I see it as a race between virus mutations and vaccine rollout,” said Rob Subbaraman, head of global market research at Nomura Holdings Inc. then spread to Europe, ultimately the countries that suffered the most in emerging markets. It’s an ominous sign that history is repeating itself. “

Markets show signs of jitters. A gauge of stocks in Asia has lagged global competitors this month, while the Indian rupee is the worst-performing currency in the region this week. Investors have sought out traditional harbors like the Japanese yen and rewarded those with better track records of managing the outbreak, such as the Israeli shekel, the Taiwan dollar and the British pound.

Companies most dependent on a reopening of the global economy are particularly vulnerable, and the latest surge in infections is overshadowing a “reopening to perfection,” wrote Stephen Innes, chief global market strategist at Axicorp Financial Services Pty Ltd. in Sydney, in a note to customers.

Great expectations

The IMF predicts that the world economy will grow by 6% this year

Source: International Monetary Fund


“The glaring problem is that, despite the strenuous efforts of the medical community around the world, we can’t even call it a day so that people can start over or continue more productively,” said Innes.

.Source