The COVID-19 pandemic has led to a deep global recession in 2020 and the recovery is likely to be partial and uneven, with some sectors and countries picking up faster than others, the International Monetary Fund (IMF) said on Monday.
In its G-20 report on strong, sustainable, balanced, and inclusive growth in 2020, the IMF noted that although there are tentative signs that the worst is over, uncertainty is still high as infections continue to increase.
It added that sustained, strong, and inclusive growth is unlikely to be attained until the pandemic is stifled with medical solutions.
“Moreover, while much is still to be learned about the post-pandemic world, the transition could entail a wave of bankruptcies and a reallocation of resources between sectors, with the skills needed for the expanding activities possibly different than those possessed by the jobless,” said the report.
On the other hand, climate change is likely to continue to disrupt growth, in particular in small disaster-prone economies, in the absence of strong adaptation and mitigation actions, according to the report.
Dealing with such challenges, the report called on policymakers to focus on ending the crisis and begin healing wounds, stressing that the utmost priority is to quickly end the health crisis, support economies and people, and pave the way for a recovery that is not only strong and durable, but that benefits all people.
This requires providing ongoing support, containing the spread of the pandemic through ensuring widespread testing, contact tracing, social distancing, and the use of masks, the report added.
Moreover, monetary and financial-sector policies should remain accommodative and help support financial stability, and fiscal authorities will need to ensure that policy support is not withdrawn prematurely, as some discretionary measures expire, to help households, workers and companies, according to the report.
It also called for identifing well-targeted measures that can replace expiring ones and that can be introduced quickly if growth threatens to fall below baseline projections.
The report urged policymakers to expand in public investment in healthcare, education, and physical and digital infrastructure to promote recovery.
Additionally, structural reforms are also needed to address pre-pandemic gaps and to enable a positive transformation and limit scarring, as the crisis has revealed the need for greater digitisation, especially of government services, and reforms to insolvency regimes and debt resolution systems.
“Once the crisis is clearly abated, focus will need also to turn towards putting debt levels on a downward path to ensure longer-term debt sustainability and restore buffers,” stated the report.
It also called for enhancing access to opportunities, including taking decisive actions aimed to reverse the rise in poverty and income inequality caused by the pandemic, establishing wider social safety nets and expanding access to essential goods and services.
Furthermore, it is essential to enhance access for all to healthcare, high-quality education, financial services, and technology to help prevent a crisis-driven rise in inequality from becoming permanent and to lift aggregate demand as economies recover.