Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

The International Monetary Fund’s latest World Economic Outlook is a sobering read, despite the Washington-based group’s unchanged forecast for strong global growth in 2021.

Although the IMF says that the global economy remains on track to expand by 6% this year, and by an upgraded 4.9% in 2022, behind the scenes the report strikes a worrying tone.

Most importantly, the latest unchanged growth figure is a combination of slightly higher growth in the developed world but a slowdown in emerging and low-income countries. In large part this is due to the unequal spread of Covid and a widening gap between the measures taken to combat the virus in the rich and the poor worlds.

The IMF thinks that the spread of Covid through poor countries could cost the world economy $4.5trn by 2025. So, no-one should think that this is someone else’s problem. We really are all in this together.

Like the World Bank, the World Health Organisation and World Trade Organisation, the IMF is calling on rich countries to deploy vaccines more equitably around the world. It has set a target of vaccinating at least 40% of the population in every country by the end of this year and 60% by the middle of next year.


Currently, the developed world has already achieved the 40% target but in emerging markets just 11% have been jabbed and in low-income countries it’s far less even than this low figure.

Sitting in the UK, which the IMF thinks will grow at 7% this year, in line with the US and well ahead even of other developed countries like Italy, Germany and France, that might not seem so important. But it matters a lot.

The remarkable advances in global growth in the past 40 years or so were achieved because billions of people were pulled out of poverty in emerging markets like China, India and other smaller developing countries.

The expansion of the global middle class, taking people from subsistence to consumption, saving and financial security, is obviously great news for those making the transition. But it has also been a key driver of rising living standards in the developed world too.

Providing a place at the rich countries’ table has made everyone richer. Pulling up the drawbridge in misguided charity-begins-at-home protectionism can only reverse that process.

The cost of the IMF’s vaccination proposal might be $50bn. That sounds like a lot of money, but it is a drop in the ocean compared to the money that has already been spent in rich countries to protect their own citizens. The return on investment would be enormous.

From an investment perspective, the current high level of stock markets around the world is a reflection of the remarkable progress towards defeating Covid in a handful of rich countries. The staggering growth in corporate earnings in the current earnings season is testament to the resilience of economies that can benefit from efficient health services and governments with deep pockets. 

But the gains we have all enjoyed over the past 16 months - the S&P 500 has doubled over that time - are vulnerable. If the virus is seen to be spiralling out of control, lending and investment will be held back and the world economy’s growth potential could be impaired for years to come. We are winning the war. But there’s a long way to go before we can declare victory.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.

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