The global economy is seeing greens shoots of recovery, with some economies doing better than expected. However, according to the International Monetary Fund's managing director, risks remain for developing and emerging countries that still require support and debt assistance.
The economic recovery is driven by a strong and synchronized policy response by governments and central banks, Kristalina Georgieva said. The situation has also improved since May as the world has "learned to function with this pandemic still around us," she added.
"What we are getting as incoming data, paints a less bleak picture. In other words, we see some signs of recovery in the world economy," Ms. Georgieva told a meeting of global finance ministers convened by the UN on Tuesday.
"Several advanced economies are doing less bad – I cannot say better because -6, -8, -10 percent is [still] bad – but less so than we had anticipated in our previous outlook."
China, the world's second-biggest economy where the pandemic first surfaced last year, has turned a corner. However, most emerging and developing economies are not seeing a reversal in their fortunes yet, she said.
"Some actually would see, in our projections, a downgrade, not an upgrade in their [economic] fate," Ms. Georgieva said.
"tourism-dependent economies [in particular] are on their knees … and the virus is now moving [to] where health systems are weaker."
Nine months after the coronavirus first surfaced, the world is still trying to cope with many infections in Asia, Europe, Africa, and the Americas. The pandemic has tipped the global economy into the deepest recession since the Great Depression. The IMF forecasts the world economy will shrink 4.6 percent this year while the World Bank estimates it is likely to contract 5.2 percent.
The pandemic's unprecedented fiscal response has already reached more than $11 trillion (Dh40.37bn) globally. But, global debt has also soared to $258tn or 331 percent of GDP in the first quarter of 2020. Global public debt is now expected to exceed a record of 101 percent of GDP in 2020-21, as nations borrow to support their economies and financial markets.
Debt levels of vulnerable countries have reached a point where it is "suffocating their capacity to act."