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The IMF’s Growth Forecasts for Poor Countries Don’t Match Its COVID Narrative

Author

Listed:
  • Justin Sandefur

    (Center for Global Development)

  • Arvind Subramanian

    (Peterson Institute for International Economices
    Harvard Kennedy School)

Abstract

The International Monetary Fund’s forecasts of GDP growth in 2020 suggest a substantially muted impact of the COVID crisis—about 3 percentage points smaller—for developing countries compared to advanced economies. Simple cross-country regressions show this discrepancy cannot be explained by external vulnerabilities to trade disruptions, financial crises, or commodity price shocks, which mostly suggest a more severe crisis in the developing world. It also cannot be explained by the domestic shock, because—while current case totals are greater in advanced economies—the policy responses of social distancing and lockdowns which will directly constrain economic activity have been similar across both groups of countries, and fiscal policy responses have been significantly weaker in developing countries. We hope that the relative optimism will not induce complacency and elicit a less-than-forceful response by countries themselves nor legitimize an ungenerous, conditionality-addled response on the part of the international community in the face of an unprecedented calamity.

Suggested Citation

  • Justin Sandefur & Arvind Subramanian, 2020. "The IMF’s Growth Forecasts for Poor Countries Don’t Match Its COVID Narrative," Working Papers 533, Center for Global Development.
  • Handle: RePEc:cgd:wpaper:533
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    Cited by:

    1. Gutiérrez-Romero, Roxana & Ahamed, Mostak, 2021. "COVID-19 response needs to broaden financial inclusion to curb the rise in poverty," World Development, Elsevier, vol. 138(C).
    2. Giovanni Valensisi, 2020. "COVID-19 and Global Poverty: Are LDCs Being Left Behind?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(5), pages 1535-1557, December.
    3. Christian-Lambert Lambert Nguena & Prince Piva Asaloko, 2023. "Financial inclusion, growth and poverty: Evidence from Africa in COVID-19 era [Inclusion financière, croissance et pauvreté à l'ère de la Covid-19 en Afrique]," Post-Print hal-04150097, HAL.
    4. Christian Lambert NGUENA & Prince PIVA ASALOKO, 2023. "Financial inclusion, growth and poverty: Evidence from Africa in COVID-19 era," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 57, pages 81-100.
    5. Christopher Hoy & Andy Sumner, 2021. "The End of Global Poverty: Is the UN Sustainable Development Goal 1 (Still) Achievable?," Global Policy, London School of Economics and Political Science, vol. 12(4), pages 419-429, September.

    More about this item

    Keywords

    IMF; coronavirus; covid-19; growth forecasts;
    All these keywords.

    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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