World Bank: COVID-19 recovery is exacerbating ‘global inequality’

Reversal of the trend of reducing inequality over the past 20 years
Low-income countries with macro-policy tied to inflation
‘Fair vaccine distribution’ selected as an urgent task

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The World Bank (WB) forecast that inequality between countries will be greater than in the past due to the difference in the speed of recovery from the COVID-19 pandemic. This is because, while advanced countries are implementing strong fiscal and monetary policies to recover, low-income countries are facing various risks, such as vaccination rates remaining in the single digits and being engulfed in inflation risks. On the 11th (local time), the World Bank published the ‘World Economic Outlook Report’ based on these details. According to the report, wealthy countries are expected to fully recover their economies from 2023 to pre-COVID-19 levels, while emerging and developing countries will see growth of around 4% below pre-pandemic trends. Even that, if China is excluded from the emerging and developing countries group, the growth rate will fall by 5.2% compared to the past trend. World Bank President David Malpass said that “the canyon is getting deeper” between developed and developing countries. The World Bank diagnosed that low-income countries, in particular, are tied to high inflation rates, rising interest rates, and the flow of energy transition. “Rising inflation is constraining monetary policy[in low-income countries],” the World Bank said. Long before the economic recovery, the intensity of the easing policy has been reduced due to the burden of inflation. “Emerging and developing countries must undertake reforms to clear the wounds of the pandemic,” said Aihan Kose, director of the World Bank’s development outlook. It should be a direction that responds to the challenges of climate change,” he said. The results of this analysis were published earlier last year by British economist Angus Deaton, who won the Nobel Prize in Economics. An Empirical Study on the Relationship Between Corona and Inequalityis slightly different from Deaton’s research has shown that the level of inequality between countries is lessening than was expected by the general public as the corona virus eroded the economies of advanced countries with relatively large economies. However, Deaton’s study empirically looked at the pattern of inequality between countries during the year 2020, when the pandemic began, unlike the World Bank’s estimate of the economic recovery trend for the next several years as well as the present after the COVID-19 pandemic. The World Bank diagnosed that the pandemic is reversing the trend of reducing global inequality that has been achieved over the past 20 years. The World Bank estimated that “because of the slow recovery of emerging and developing countries, the level of inequality between countries will return to a level similar to that of the early 2010s.” Marie Pangestou, director of development policy cooperation at the institution, said, “The priority right now is to control the epidemic through more widespread and equitable deployment of vaccines. Addressing growing inequality requires more sustained support. Global cooperation is essential to help indebted developing countries secure resources to achieve green, resilient and inclusive development.” Reporter Lee Ji-hye [email protected]

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