After the devastating global recession that followed the onset of the COVID-19 pandemic, the world is beginning to see signs of economic recovery. However, that recovery won’t happen in a vacuum: It will require cooperation between nations and the private sector to find multilateral solutions to numerous concurrent global challenges.
“Fighting a global pandemic, dealing with climate change, reducing inequality — these big, consequential issues transcend national borders and all relate to the sustainability of growth,” said Antoinette Sayeh, deputy managing director of the International Monetary Fund (IMF). “They can only be tackled by countries working together.”
At the 2021 U.S. Chamber of Commerce Global Forum on Economic Recovery, Sayeh shared three key multilateral economic priorities that must be addressed to solve these pressing global challenges.
Faster Progress on COVID-19 Vaccination Efforts Would Boost the Global GDP and Tax Revenues
Right now, vaccine policy is the most important economic policy, said Sayeh. Investing in public vaccination efforts and making faster progress would add almost $9 trillion to the global GDP by 2025 and enable over $1 trillion in additional tax revenues, she said.
“Coordinated international action on vaccines is key in this respect, but this window is closing fast,” Sayeh explained. “The longer it takes to speed up vaccine rollout, the harder it will be to achieve these gains. We must do whatever it takes to ramp up production capacity and deploy a fair mechanism to redistribute vaccines from surplus to deficit countries.”
International Tax Policy Must Be More Simplified, Predictable, and Fair to Countries and the Businesses That Operate Within Them
“It is broadly in the interest of countries and of the private sector to limit tax competition and the proliferation of chaotic, unilateral tax measures,” said Sayeh. “We must come together to create an international tax system that is designed for the 21st century — one that is simplified, harmonized, predictable and fair, thus instilling broad public trust.”
Sayeh noted that multilateral efforts toward such a system are already underway with an inclusive framework initiated by the Organisation for Economic Co-operation and Development (OECD), which now includes 139 countries.
“This type of a coordinated approach will help simplify an overly complex system, better align incentives and provide predictability,” she said. “It will also help create a fair system where companies pay taxes in the countries where they operate.”
Climate-Friendly Business Initiatives Can Ultimately Increase Global GDP and Create Millions of Jobs
Sayeh reminded global and corporate leaders that climate change has an impact on macroeconomics and overall financial stability. Failure to address these issues presents risk to the functioning of global economies, but responding to them strategically offers opportunities for growth and jobs.
“As the world starts to recover, we must accelerate the shift to a green economy,” Sayeh explained. “To do that, we need a robust price on carbon, which can send a critical market signal and advance climate-friendly investments. IMF analysis shows that steadily rising carbon prices and a green investment push could boost global GDP by about 0.7% per year in the next 15 years and create millions of new jobs.”