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Head of IMF fears COVID-19 crisis will further widen wealth gap

Head of IMF fears COVID-19 crisis will further widen wealth gap
Signs on a subway inform riders that face masks are required for travel, in Athens, Greece, on August 7, 2020. File Photo by Thomas Maresca/UPI | License Photo

Feb. 22 (UPI) -- The head of the International Monetary Fund told European lawmakers Monday that the coronavirus pandemic will likely widen the wealth gap in Europe without a global recovery and a focus on making economies more climate-friendly.

IMF Director Kristalina Georgieva made the remarks during a speech at the European Union Parliamentary Conference in Belgium.

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Georgieva noted that the health crisis caused economic decline in 90% of the world's countries in 2020, and called it the worst global performance in peace time.

She added that COVID-19 vaccines have helped stabilize economies, but the path to recovery remains uncertain. Her "deepest concern," she said, is that the crisis will increase the difference between the haves and have-nots.

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"[It is] uncertain because of the ongoing race between the virus and the vaccines. Uneven because of the difference in starting positions, economic structure and capacity to respond -- causing inequalities to grow both across and within countries."

"The latter is my deepest concern: that the Great Lockdown of 2020 could morph into a great divergency in 2021," she continued. "Divergence is most profound in the developing world where half of the countries that used to catch up in income levels with their wealthier peers are now falling further behind. But it is a risk for the EU as well."

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The IMF projects that by the end of 2022, per capita income for emerging markets in Central and Eastern Europe will be almost 4% below their pre-pandemic projection -- compared to just 1.3% for advanced economies.

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Georgieva noted that lower-wealth regions have been damaged more, since they had fewer jobs that allowed for remote work.

Scaling up vaccine production is a critical step, she said, along with fighting the economic crisis through greater emphasis on equity, increased access to high-speed Internet and "a coordinated green infrastructure investment push."

Improved Internet access in rural and underserved areas, she explained, would raise productivity.

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An IMF analysis has shown that investment in green infrastructure could create millions of new jobs and increase the global economy by almost 1% over 15 years.

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