International Monetary Fund Managing Director Kristalina Georgieva and Chief Economist Gita Gopinath said on Wednesday that while the global economy was recovering from the lockdowns imposed to battle the coronavirus, a full recovery was unlikely until a vaccine is discovered. Georgieva and Gopinath made the observations in an article in Foreign Policy magazine.

“Lingering uncertainty about the virus and the fear of recurring outbreaks are weighing on mobility and the confidence of consumers and businesses,” the co-authors said. “The availability of a vaccine, or therapies with proven success in treating Covid-19, will materially lift the global outlook.”

They said the “Great Lockdown” of 2020 was worse for the global economy that the 1929-’33 Great Depression. They said that the “severity and speed of the declines in economic output, employment, and consumption during the Great Lockdown were far greater than at the onset of the Great Depression”.

However, the global economy has also rebounded strongly, with over 80% of countries lifting the lockdowns partially or wholly. The speed of the rebound is also higher than that during the Great Depression, the co-authors said. Central banks and governments around the world have also implemented policies to support the economy on an unprecedented scale and at rapid speed, unlike during the Great Depression.

However, Georgieva and Gopinath warned that the crisis was far from over. The recovery is uneven and for it to continue, supporting policies must not be withdrawn soon.

“Even as people return to work, employment rates in many countries have not returned anywhere close to pre-crisis levels,” the co-authors said. “Job losses have hit younger and lower-skilled workers especially hard. Globally, the International Labor Organization estimates that the equivalent of 400 million [40 crore] full-time jobs were lost in the second quarter of 2020.” The IMF officials added that the World Bank has projected that 7.1 crore people will fall into extreme poverty.

To secure a sustained recovery, three steps are necessary – bringing the health crisis to an end by developing a vaccine or discovering a cure for the coronavirus, enabling people to find productive jobs and policies to arrest global warming and reverse rising inequality, they said.

“The speed with which countries have committed resources to developing a vaccine is without historical precedent and can only be commended,” Georgieva and Gopinath said. “As of September 8, at least 128 vaccines are under development, and 37 have reached human trials. Historical evidence suggests that an effort of this scale has a 90% of developing a successful product.”

However, they added, timely production, a globally adequate supply, and an equitable distribution of the vaccines is necessary to curb the pandemic quickly. They urged governments to take steps to prompt private pharmaceutical companies to commit to production before the testing phase was completed. “Delaying production until a vaccine has successfully passed all medical trials could add up to 18 months to its distribution in many countries, potentially choking the recovery,” the officials said.

Vaccine trials

The Serum Institute of India on Thursday stopped third stage trials of a vaccine after a volunteer in the United Kingdom fell ill, and the producing company AstraZeneca halted trials. However, Russia has claimed to have developed a successful vaccine, and India may collaborate with the country to carried out third-stage trials and production. On Wednesday, Russia began inoculating volunteers with its Sputnik-V vaccine, even as scientists expressed skepticism about the accuracy of data from the vaccine’s early-stage trials, saying it looked “highly unlikely”.

The coronavirus has so far infected 2,78,93,832 people around the world, and killed 9,04,333, according to the Johns Hopkins University. As many as 1,87,95,830 people have recovered.

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