The First Deputy Managing Director of the International Monetary Fund, Jeffrey Okamoto, estimated the expected global GDP losses due to the COVID-19 pandemic to be around $15 trillion during the period from 2020 to 2024, equivalent to 2.8% of the global output value. Okamoto stated that some growth-supporting reforms have been postponed, if not rolled back, and that economies have suffered some deep scars. "The world has lost output valued at $15 trillion due to the COVID-19 pandemic," he added in a statement on the fund's website today, Wednesday.
He emphasized that the energy directed towards spending on vaccination operations and recovery plans should also be directed towards growth-supporting measures to compensate for this lost output. The First Deputy Managing Director believes recovery from this crisis will take years for most countries, but the main challenge for this generation of policy-makers is to combine growth-supporting reforms with recovery spending that will lead to the prosperity promised to our citizens, which will determine our fate in a post-COVID-19 world.
Key points from the statement include:
- Since March 2020, governments have spent $16 trillion to provide financial support during the pandemic.
- Central banks worldwide have increased their balance sheets by a total of $7.5 trillion.
- Financial deficits have reached their highest levels since World War II.
- Central banks provided more liquidity last year than in the previous ten years combined.
Okamoto noted that as vaccine production increases, the number of vaccinated individuals rises, and more economies reopen in the coming year, policy-makers should plan for a fundamental shift from trying to save their economies from collapse to strengthening these economies to face future events through growth-focused reforms.
