A stark inequality has emerged in the recovery from COVID 19, with underdeveloped economies growing exponentially while advanced economies struggle to contain the virus and distribute vaccines.
It's a story of two recoveries, told Yahoo Finance Ayhan Kose, Director of Prospects Group at the World Bank. You have advanced economies vaccinating promptly and delivering phenomenal growth rates. Other countries, their growth rate will still be around 4 - 4.5% with outbreaks.
The estimated growth rate of 5.6% in 2021 has already become headlined as the fastest rate of growth after a global recession in less than 80 years. But these gains have not been evenly spread but in economically developing countries, growth rates are considerably slower and have more devastating effects.
The effects of the pandemic are compounding the earlier gains in poverty reduction and fuelling food insecurity and other long-standing challenges, said World Bank in a 2021 Global Economic Prospects report published earlier this week. The global outlook remains highly uncertain, with major risks around the path of the pandemic and the possibility of global stress amid large debt loads.
Budgetary problems have held low-income countries back beyond the direct costs of the virus. The threat of food inflation is particularly grave to these countries, as it can further exacerbate food insecurity.
Now we see record increases in food commodities and the prices of agricultural commodities around the world, said Kose. The food and feeding low-income countries makes all of this news for them, said Kose.
On the other hand, advanced economies have rebounded relatively smoothly from COVID 19. Last quarter, the U.S. GDP growth was 6.4%. According to IMF, the Euro zone is projected to grow at about 4.2% in 2021.
But output in the region of the Middle East and North Africa, by contrast, is projected by the World Bank to grow by 2.4% in 2021, half the recovery rate that followed the global recession of 2009.
Issues with the vaccination distribution have severely hampered economic recoveries in low-income countries. Infectious cases remain high in Eastern Asia and the Pacific, with recent upticks in cases occurring in Cambodia and Thailand.
'Several countries in Central Asia, Eastern Europe and the Western Balkans face bottlenecks attributed to the production, procurement or delivery of vaccines secured through the COVAX facility or other agreements, the World bank report found.
The World Health Organization said last month that Africa needs '200 million doses of vaccines to vaccinate 10% of its population by September, and at the end of this past May, less than 2% of Africa had been vaccinated.
South Africa, the African country of which is the hardest hit by the coronavirus, has had a slow rollout of vaccines and restarted certain vaccination programs multiple times earlier this year.
When you look at the advanced economies, they have been able to basically vaccinate 50% of the population, Kose said. ''In emerging economy, developing economies, that number is much lower. In low-income countries, only 0.3% of population got vaccinated so far unless we control the vaccine everywhere, we can not contain the crisis and we cannot get ahead of the problem we have.
One way that emerging economies can help is by sending vaccines to the COVAX facilities and donating vaccines to emerging markets and developing economies, Kose said. They desperately need these vaccines.
On Wednesday, the Biden administration announced that the U.S. will donate 500 million more doses of the Pfizer vaccine to 92 low-income countries and the African Union over the next year. The Quad, an informal strategic dialogue between the United States, Japan, Australia and India, has also announced plans to reduce manufacturing backlogs, distribute vaccines and fight new COVID mutations.
Ihsaan Fanusie is a writer at Yahoo Finance. Follow him on Twitter IFanusie and his work is done
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