Representative surveys of the public from 28 countries show broad support for multilateral climate action but limited knowledge of key climate policies. Providing information on policy efficacy and tradeoffs enhances alignment of individual preferences with climate policy goals.

Rising food and energy price inflation is likely to have significant negative distributional implications on households in low-income countries and emerging markets. Under different scenarios for food and energy price growth over the course of this year, the share of households living below half of median annual income per capita may increase up to 1 percentage point in some countries. As a result, consumption inequality is likely to increase over the medium term, unless policies succeed in altering historical patterns. 

The global economic recovery continues amid a resurging pandemic that poses unique policy challenges. Gaps in expected recoveries across economy groups have widened since the July forecast, for instance between advanced economies and low-income developing countries. Meanwhile, inflation has increased markedly in the United States and some emerging market economies. As restrictions are relaxed, demand has accelerated, but supply has been slower to respond. Although price pressures are expected to subside in most countries in 2022, inflation prospects are highly uncertain. These increases in inflation are occurring even as employment is below pre-pandemic levels in many economies, forcing difficult choices on policymakers. Strong policy effort at the multilateral level is needed on vaccine deployment, climate change, and international liquidity to strengthen global economic prospects. National policies to complement the multilateral effort will require much more tailoring to country-specific conditions and better targeting, as policy space constraints become more binding the longer the pandemic lasts.

This chapter examines the possible persistent damage (scarring) that may occur from the COVID-19 recession and the channels through which they may occur. Importantly, financial instabilities—typically associated with worse scarring—have been largely avoided in the current crisis so far. While medium-term losses are expected to be lower than after the global financial crisis, they are still substantial, at about 3 percent lower than pre-pandemic anticipated output for the world in 2024. The degree of expected scarring varies across countries, depending on the structure of economies and the size of the policy response. Emerging market and developing economies are expected to suffer more scarring than advanced economies.