WORLD ECONOMIC OUTLOOK .

 IMF's World Economic Outlook, October 2021 focus on "Recovery during a Pandemic:Health Concerns, supply disruptions and price pressures ".Global economic recovery continues despite resurgent pandemic.Pandemc outbreaks in critical links of global supply chains have resulted in longer than expected supply disruptions further feeding inflation in many countries Overall risks to economic prospects have increased and policy trade offs have became more complex. Compared to July forecast IMF's global growth  projection for  2021has been revised down originally to 5.9% and is unchanged for 2022 at 4.9%.While advanced economies are projected to grow at 5.2% in 2021 and 4.5% in 2022 emerging markets and developing economies (EMDEs)is expected to grow at 7.2% in 2021 and 6.3% in 2022.Among advanced economies UK is expected 6.8% growth followed by France 6.3% and USA 6%  growth this year. As far as India and China are concerned China is expected to grow 8.0% in 2021 and 5.6% in 2022.India with a contraction of -7.3% in 2020 is projected to grow 9.5% in 2021 and 8.5% in 2022.

      Vaccinations have proven effective in mitigating adverse effects of Covid19. However unequal access to vaccines, vaccine hesitancy and higher infectiousness have left many countries and people still susceptible to pandemic. The spread of delta variant and other variants could undermine vaccine effectiveness. So far death toll due to Covid19 amounts to five million lives. Divergence in Economic output/growth are consequences of large disparities in vaccine access and policy support. Almost 60%of population in advanced economies are fully vaccinated and some are receiving booster doses.On the other hand least developed countries especially in Africa remain unvaccinated at less than 5% vaccinations and emerging market economies at about 36 percent. It may be noted here that India has not only vaccinated over a billion people but also set to provide more than 5 billion vaccine doses to reduce vaccine inequity in the developing world. 

 Supply disruptions pose another policy challenge. Pandemic outbreaks and weather disruptions have resulted in shortages of key inputs and dragged manufacturing activities in several countries.The supply shortage along with the release of pent up demand and the rebound in commodity prices have caused consumer price inflation to increase rapidly in USA,Germany and emerging market developing economies.In most low income countries food prices have increased. In many countries rising inflation reflects pandemic related supply demand mismatches and higher commodity prices compared to their low base a year  ago. While in many economies price pressures are expected to subside in 2022,among some EMDES price pressures are expected to persist. Increased food prices and lagged effects of higher oil prices coupled with exchange rate depreciation are lifting the price of imported goods. In any case much uncertainty surrounds inflation prospects primarily due to the path of pandemic, the duration of supply disruptions and how inflation expectations may evolve in the environment. Inflation is projected for India as 5.6% in 2021 and 4.9% in 2022 as against 1.1% and 1.8% respectively in 2021 and 2022 for China. 

         How can policy makers boost long-term growth in post Covid global economy? World Economic Outlook examines the role of basic scientific research as a key driver of innovation and productivity. Basic scientific knowledge diffuses internationally farther than applied knowledge. A 10% increase in domestic (foreign) basic research is estimated to raise productivity 0.3(0.6) percent on average. An increase in the stock of patents by 1% is associated with an increase in productivity per worker by 0.4%.International knowledge spillovers are more important for innovation in emerging market and developing economies than in advanced economies.Easy technology transfer collaboration and free flow of ideas across borders should be key priority. Policies to boost innovative technologies could address climate change and green technology-based investments.Unfortunately optimal research funding may be lower in fiscally constrained countries. Similarly a decoupling of basic scientific research between USA and China could have severe negative effects on global productivity upto the extent of 0.8%.

 IMF's recent General allocation of SDR$650 billion provided much needed international liquidity. Member countries with strong external position are urged to channel their SDRs into the Poverty Reduction and Growth Trust.Further more it is exploring the establishment of Resilience and Sustainable Trust for investment in sustainable growth that is backed by feasible revenue and expenditure measures by countries. While at the national level policy mix should continue to address local pandemic and economic conditions aiming sustainable employment and development at the global level access to vaccines, supply chain Resilience, fiscal sustainability, climate change, poverty and unemployment need to be tackled. Countries should resolve trade tensions and reverse trade restrictions, strengthen rule based multilateral trading system and complete an agreement on a global minimum for corporate taxes that halt "race in the bottom "and helps to finance public investments. Concerted efforts both at the national and global level are required for sustainable and speedier recovery.