Uneven vaccination between countries and the likelihood of a persistent pandemic are a serious risk to economic recovery, experts say.
The COVID-19 pandemic is approaching two years old and growth prospects are improving for large economies, but not so much for many other developing and the situation of the most vulnerable becomes more precarious due to the high loss of jobs and multiple other factors that complicate the reactivation and recovery in the midst of the recession that the world is experiencing.
The International Monetary Fund (IMF) in its latest report World economy perspectives, presented in October, revealed a slight decrease in growth estimates compared to the document issued just three months earlier, with the cracks arising from the pandemic being the main cause of the situation. It estimated a growth of 5.9% this year, one tenth less than the projection of 6% presented in July and remains with 4.9% growth for 2022.
“The global recovery continues, but momentum has weakened due to the pandemic. The highly communicable delta variant, the death toll from the disease and the risks slow a complete return to normality, ”says Gita Gopinath, IMF chief economist in the report and He explains that advanced economies are likely to return to pre-pandemic levels in 2022, but developing economies will have to wait several more years.
Larry Yumibanda, economist and president of the Guayaquil Economy Circle, points out that this year all the economies of the world show recovery, some with significant growth, others with medium growth and some with slight growth.
“Vaccination was a key factor for the recovery this year … Central banks have carried out an expansive monetary policy especially aimed at generating cash transfers, subsidies to the most vulnerable population, which is the one that has had the greatest impact on the pandemic” says the specialist.
Patricio Alarcón, former president of the Quito Chamber of Commerce, differs in the case of Ecuador and says that the country has not been able to help either the citizen or the businessman due to the lack of liquidity from the State.
The strongest growth prospects ever shown were for China and the United States. However, both powers have also experienced changes and declines.
The United States Federal Reserve (FED) reported two months ago that the industrial production index – an indicator that estimates the evolution of the sector in a short period of time – stood at -1.3% in September. One of the main causes of the fall in industrial production would be the effects of Hurricane Ida, registered at the end of August, and the shortage of semiconductors for the manufacture of vehicles, the automotive sector registered a contraction of -7.2%.
In the case of China, official data revealed that the Asian economy expanded between July and September at its lowest level, 4.9%, in part due to what the Government defined as “unexpected economic challenges”, among which stand out the pandemic, power shortage problems and a slowdown in construction.
The figure is the lowest since September 2020. The IMF had set an economic growth for China of 8.0% for this year, a figure above the Government’s projections, after presenting a GDP in 2020 of 2.3% due to COVID-19.
According to experts, many countries in Africa, South Asia, West Asia, and Latin America and the Caribbean are facing a fragile situation and uncertain economic prospects. The health emergency has pushed more than 114 million people into extreme poverty, according to the United Nations.
In the region, the forecast is that Chile will have the highest growth with an expansion of its GDP of 11% for this year. Puerto Rico with -0.6% and Venezuela with -5.0% will be the ones with the highest contractions, according to the IMF. France 24.
Alarcón says that “in Ecuador the growth is in the order of 2% and that next year the Government aims for a minimum growth of 2.5% and then up to 3% each year, which is very bad for the economy ”, and adds that a country’s growth rate must be at least 5% in order to lift its citizens out of poverty.
By 2022, Yumibanda agrees with the IMF that lhe world economy may enter a slowdown stage and fall one point since all economies, most of them, are going to begin to decrease their growth levels compared to 2021.
“The pandemic has not happened and the new variants have meant that it is not generated and that it can continue without generating the necessary speed for the recovery to be stronger,” he says and mentions that the expected slowdown would also be linked to what It occurs in advanced economies, such as the inflation in the United States, which restricts consumption and production.
For his part, Alarcón says that in the world the high cost of raw materials will lead to inflation worldwide. “The cost of doing business is going to rise, the cost of products in all parts of the world,” he says.
Interest in bitcoin
Meanwhile, this year, bitcoin also captured the interest of the world population and the Government of El Salvador in particular to reactivate its economy. The cryptocurrency spent in a year costing around $ 10.000 to a maximum of $ 63.000 in April 2021 and then fell to $ 30.000 in July. Currently around $ 50.000.
On September 7, El Salvador became the first country to adopt bitcoin as a legal tender, which opened the debate on the opportunities and dangers of cryptocurrencies. BBC.
Yumibanda says that the cryptocurrency this year managed to establish itself as an asset or a haven of value, but states that it has great volatility and that this market is highly risky, so that the interest in bitcoin is something more of preferences.
“There are people who want to have their resources in bitcoin because they aspire to have strong profits, something that is not going to generate in traditional national or international banks,” he says.
Consider that what happened in El Salvador is unlikely to be replicated in other economies and that the central banks have stated that they will not consider cryptocurrency as long as they do not adapt to the provisions of the law and the banking system.
Alarcón says that the cryptocurrency is expected to continue to gain ground in 2022 and emphasizes that it is necessary to work as soon as possible on a regulation to be able to transact with the cryptocurrency in the face of the existing demand. (I)
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