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- Uneven vaccine rollouts are widening the gap between the recovery's winners and losers, the IMF said.
- The IMF lifted its growth forecast for advanced economies and lowered its outlook for developing nations.
- The organization warned of a K-shaped rebound just months into the pandemic as COVID slammed major economies.
- See more stories on Insider's business page.
The gap is widening between the winners and losers of the global COVID-19 recovery, thanks to uneven vaccine access, the International Monetary Fund said Tuesday.
The IMF released its outlook for global growth in a new report, maintaining the world economy will grow by 6% this year. The devil, however, is in the details. Growth for advanced economies was revised 0.5 points higher. Conversely, the IMF lowered its estimate for growth in emerging markets and developing economies by 0.5 points.
The two groups will diverge even further through next year, according to the report. While the IMF lifted its 2022 growth estimate to 4.9% from 4.4%, the bulk of the upgrade comes from stronger performances by advanced economies.
It's all about the vaccines
The unevenness comes down to countries' vaccination efforts, Gita Gopinath, economic counselor at the IMF, said in a blog post.
Nearly 40% of the population in advanced economies has been fully vaccinated against COVID-19. That compares to just 11% in emerging markets, and an even smaller share in developing nations. As the Delta variant spreads around the world, speeding up vaccine rollouts in lagging countries is key to closing the growth gap, Gopinath said.
The disparity echoes warnings given by the IMF just months into the pandemic's onset. The organization said in April 2020 that the pandemic would power the largest downturn since the Great Depression, and that "no country is safe" until a vaccine was developed. Projections included in the early 2020 report saw advanced economies contracting 6.1% in 2020, reflecting outsized fallout in the US and EU.
However, emerging markets and developing nations only contract 1% as China swiftly rebounded and other countries faced relatively small outbreaks. The group also saw faster growth through 2021 compared to their larger peers, according to the IMF.
Fifteen months later and the script has almost completely flipped. Advanced economies' swift vaccine distribution has led to the easing of restrictions and a rebound in consumer spending. Vaccines' effectiveness against the Delta variant has also helped nations avoid new rounds of crippling lockdowns.
Emerging markets and developing countries are faring far worse. Case counts have surged in recent weeks as the Delta variant proliferates. Sub-Saharan Africa, Latin America, and Eastern Asia all risk stagnant recoveries should cases rise further, the IMF said.
Gopinath reiterated the need for additional funding to help struggling countries catch up with advanced economies. The IMF aims to spend $50 billion on vaccinating at least 40% of every country's population by the end of 2021 and 60% by mid-2022. Sharing surplus doses and removing trade restrictions to speed up shipments can also help close the vaccination gap, she said.
"Concerted, well-directed policy actions at the multilateral and national levels can make the difference between a future where all economies experience durable recoveries or one where divergences intensify, the poor get poorer, and social unrest and geopolitical tensions grow," Gopinath added.