Even the IMF and World Bank Warn About Economic Breakdown in Underdeveloped Nations
April 5 , 2021 (EIRNS)—An article in yesterday’s Sunday Washington Post headlined “With Stimulus Cash and Jobs Spike, U.S. Emerges as Main Engine for Global Economic Recovery” begins by reviewing the wonderful economic recovery that is supposedly underway in the U.S., thanks to the huge increase in government spending combined by super-low interest rates. It says that “the U.S. economy is gathering so much steam that its gains will not stay at home,” and that the U.S. is about to replace China as the engine of world economic growth.
This is all false. But the article then turns to reports being issued by the IMF and the World Bank, as their annual spring meetings get started today, April 5. Kristalina Georgieva, managing director of the International Monetary Fund, warned in a speech last week that by the end of 2021 emerging economies will have suffered a 20% loss in per-capita income, largely because of the impact of the pandemic. EIR has shown that the collapse of the informal economy as the pandemic has raged is having a particularly disastrous impact on developing countries’ economies where the informal sector is dominant. The Post article reports that this year, 120 developing countries are scheduled to repay $1.1 trillion in debt. But 72 of those countries may not be able to pay those bills without sacrificing spending on vaccinations or economic relief. Interest rates are rising in emerging sector countries such as Brazil, Turkey and Russia, which will make the debt crisis even worse for them.
World Bank President David Malpass last week rang the alarm that the pandemic has pushed more than 100 million people into “extreme poverty,” with one-quarter billion suffering “acute hunger.” Achim Steiner, administrator of the United Nations Development Program, told reporters last week: “We are facing an increasingly severe situation. It is far from over. It is, in many parts of the world, getting worse.”