Vaccines and fresh economic stimulus promised by US President-elect Joe Biden will give the global economy a chance to put the coronavirus pandemic behind it in 2021, policymakers and industry leaders told the Reuters Next conference.

Their optimism came despite a resurgence in Covid-19 cases that has prompted the World Bank to downgrade its growth forecast for this year and warn that delays in vaccination programmes could pinch recovery even further.

The head of German engineering giant Siemens AG said China is currently driving the world economy but was optimistic about recovery in the United States, where Biden has promised a faster rollout of vaccines and more economic stimulus.

“In the US…they are holding all the cards and if they put the money to work in a wise way, there is going to be a very strong second half of 2021 and especially 2022,” Siemens CEO Joe Kaeser told the digital forum.

The fight against the pandemic, which has claimed 1.9 million lives globally, has now entered a critical stage as countries around the world roll out vaccination campaigns aimed at immunising large sections of their populations by year-end.

At the same time, emerging new variants of the virus have raised concerns about vaccine resistance and a faster spread of the disease, while China is battling a rise in cases that has seen more than 28 million people put under home quarantine. The Washington-based World Bank last week cut its 2021 global growth forecast to 4% from 4.2% and said the rise in output could be as little as 1.6% if there were vaccine delays. Despite delays in the US inoculation programme, St Louis Federal Reserve President James Bullard said he was optimistic that vaccines heralded a way out of the pandemic, and that economic activity would revive as fatalities started to fall.

European Central Bank President Christine Lagarde was also upbeat, reaffirming the ECB’s existing growth forecasts for the euro zone on the provision that lockdown measures are lifted by the end of March and vaccines adequately distributed.

She cited as positives the fact that, after elections in the state of Georgia, Biden could count on US Senate support for his economic programme and that Britain and the European Union had managed to avert a no-deal Brexit on December 31. “Some of the uncertainties we had on the horizon that made us look at the future with a dark cloud over our heads,” Lagarde said.

Published in The Express Tribune, January 14th, 2021.

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