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WEF observes Covid-19 damage to the world’s economies is widening the gap between rich and poor

Speakers at the World Economic Forum (WEF) virtual gathering last week highlighted that the pandemic had reversed gains in poverty reduction, hit incomes, and seen global economic slump. Picture: Jean-Christophe Bott, EPA

Speakers at the World Economic Forum (WEF) virtual gathering last week highlighted that the pandemic had reversed gains in poverty reduction, hit incomes, and seen global economic slump. Picture: Jean-Christophe Bott, EPA

Published Jan 24, 2022

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IN SPITE of stronger-than-expected recovery, the global economic damage caused by the Covid-19 pandemic in the past two years has been significant, and further widened the gap between the rich and the poor.

This was the view of many expert speakers at the World Economic Forum (WEF) Davos Agenda 2022 virtual meeting, that concluded on Friday.

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Speakers at the WEF virtual gathering last week highlighted that the pandemic had reversed gains in poverty reduction, hit incomes, and seen global economic slump.

However, they remained bullish about the recovery largely due to rapid vaccine deployment in the developed countries, though concerns remained about poor countries still lagging behind.

President of the European Central Bank, Christine Lagarde, said the global economy was experiencing a “superstrong recovery” that had outpaced supply seen in a 50 percent hike in energy prices, a shortage of drivers in Europe, the clogging of ports, and rising inflation.

Largade, however, warned about divergence in global economic recovery based on the financial muscle of different countries.

“We are seeing recovery that is stronger than anything we had expected, particularly in advanced economies,” Largade said.

“But there has been divergence, the divide, and the different rhythm at which countries are progressing.”

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International Monetary Fund managing director Kristalina Georgieva, however, warned that the recovery was faced with losing momentum in 2022.

“We anticipate the recovery to continue, but it is losing some momentum and it is faced with renewal of infections, on top of them the much more persistent than anticipated inflation, and record high debt-levels contribute to $26 trillion (R392..4trln) in debt,” Georgieva said.

As a result, Australian Prime Minister Scott Morrison said the global community needed to work together to ensure the recovery was fast and equitable.

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“The world needs a fast recovery reminiscent of those in the 1980s and 1990s, not the prolonged, sluggish recovery that followed the global financial collapse in the 2010s,” Morrison said.

“This is vital, because we know Covid-19 has accentuated new divides between those bearing the brunt of the pandemic and those able to insulate, between countries that have strong health and vaccination infrastructure and those that sadly don’t. A fast recovery must be our shared economic mission.”

UN secretary-general António Guterres called for a reform of the global financial system in order to set the right global recovery.

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“We need to reform the global financial system in a way that it can work for our countries without being biased. At this critical moment, we are setting in stone a lopsided recovery,” Guterres said.

“More than eight of the 10 recovery dollars are being spent in developed countries. Low-income countries are at a huge disadvantage.”

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