Slow vaccine rollout stands to halve world growth: World Bank's Reinhart

Global growth this year could be less than half the World Bank’s 4% estimate if vaccine distribution doesn’t move quickly, said chief economist Carmen Reinhart. A more drawn-out recovery will add to the pressure on nations that are burdened with debt, many of which will likely seek to restructure due to the pandemic, Reinhart said in an interview with Stephanie Flanders for Bloomberg’s The Year Ahead virtual summit. Emerging markets are going to have a “rough road ahead,” she said.

The Group of 20’s common framework, which aims to get China and private lenders more involved in debt relief, can help poor countries resolve issues faster, Reinhart said. A number of countries had fragile debt positions prior to the pandemic, and the world is slowly moving toward forgiveness rather than just payment suspension, she said.

Chad yesterday became the first country to request the restructuring of its external debt under the G-20 framework. Zambia and possibly Ethiopia are among some of the countries that would benefit from faster debt resolution, she said.

“The more permanent reductions -- restructurings of some of these countries that are in need -- is more of a medium-term” objective, Reinhart said.

Reinhart, co-author with Kenneth Rogoff of the 2009 book “This Time Is Different: Eight Centuries of Financial Folly,” is known for her expertise in the history of debt and financial crises. She joined the World Bank in June, taking leave from Harvard University, where she is a professor.