(Reuters) – Vaccines and fresh economic stimulus promised by US President-Elect Joe Biden will give the global economy a chance to put the coronovirus epidemic behind it in 2021, policymakers and industry leaders told the Reuters Next Conference.
His optimism came despite a resurgence in COVID-19 cases, which has prompted the World Bank to lower its growth forecast for this year and warned that delayed recovery in vaccination programs could be even greater.
The head of German engineering giant Siemens AG said that China is currently running the world economy, but was optimistic about the recovery in the United States, where Biden has promised a faster roll-out of vaccines and greater economic stimulus.
“In the US … they are all holding cards and if they put money to work wisely, there will be a very, very strong second half of 2021 and 2022 in particular,” Siemens CEO Joe Kaiser Digital Told the stage.
The fight against the epidemic, which has claimed 1.9 million globally, has now entered a critical phase as countries around the world target immunization campaigns to immunize large sections of their population by the end of the year .
At the same time, emerging new variants of the virus have raised concerns about vaccine resistance and the rapid spread of the disease, while China has been grappling with an increase in cases that have seen more than 28 million people under domestic quarantine.
The Washington-based World Bank last week lowered its 2021 global growth forecast from 4.2% to 4%, saying that if the vaccine is delayed output growth could be reduced to 1.6%.
Despite the delay in America’s vaccination program, St. Louis Federal Reserve President James Bullard said he was optimistic that the vaccine was a way to avoid the epidemic, and that economic activity would resume as fatalities Were falling.
He compared the present moment of the 1944 D-Day landing, which ultimately hastened the victory of Nazi Germany and allied forces at the end of World War Two.
“It doesn’t mean the war is over, but it definitely takes you in the right direction,” he said, adding that he suspected there would be a “clearly defined” all-clear date, but its Instead there is a growing feeling that the epidemic was being defeated.
Christine Lagarde, president of the European Central Bank, was also upbeat, reaffirming the ECB’s current growth forecasts for the euro area, saying lockdown measures are taken by the end of March and vaccines are adequately distributed.
He cited the fact that after elections in the state of Georgia, Biden could count on the support of the US Senate for its economic program and that Britain and the European Union succeeded in achieving a no-deal Brexit on 31 December.
“Some of the uncertainties that we have on the horizon have foreseen a dark cloud over our heads in the future,” Legarda told the conference.
The ECB sees a 3.9% increase this year in 19 countries that use the euro currency, more optimistic than many private sector economists.
Even in the best of conditions, global recovery is not expected, and there are growing concerns that low-income countries may be left behind even more while some regions are in an epidemic fight for their survival Came out the most.
It is still unclear whether demand in areas such as construction that have managed to hold up during the epidemic has now been sucked up for years to come, said Chris Hyams, chief executive of the job listing website.
“We don’t know what is, when things return, people are just pulled over in the next five years of construction and will it all slow down, or have to work on something else?” he said.
Asked about the risk that developing nations could lag behind in economic recovery as their people struggle to pay for the COVID-19 vaccine, Legarda said that it would be up to the rich world if they did not show solidarity ” Back “.
“It is in the self-interest of developed countries to ensure that low-income, developing, fragile states have access to vaccination,” the ECB chief said.
World Bank chief economist Carmen Reinhart said the debt crisis is on the rise in many of those countries, which means that China, now the world’s largest official creditor, will need to begin restructuring the debt that But it is outstanding.
Reinhart told a panel on economic inequality, “I think China will need to do what it has to do to counter what other previous creditors had done in the past, which you will have to restructure.”
“And big-time restructuring, which means either a lower interest rate, longer maturity, write-offs in principal or some combination of that.”
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Additional reporting by Howard Schneider, John Riville, Alessandra Galloni, Karin Stroucher, Conway Gittens, and Jane Wardell; Editing by Catherine Evans