IMF improves global economic forecast for 2021

The International Monetary Fund (IMF) slightly improved its global growth forecast for 2021, as recent vaccine approvals and the promise of other vaccines to come have heightened hopes that the COVID-19 pandemic will continue later this year. However, the organization said new waves of infections and new variants of the virus pose a threat to the outlook.

In his most recent World Economic Outlook Report, the IMF said that “against a backdrop of exceptional uncertainty”, it forecasts the global economy to grow 5.5% in 2021 and 4.2% in 2022. The forecast for 2021 has been revised from 0, 3 percentage point more than previous IMF. outlook in October due to expectations that COVID-19 vaccines will help boost business later in the year and that additional political support will bolster a few large economies.

The expected recovery in growth for 2021 follows a “severe collapse” last year that resulted in a 3.5% contraction in global growth for the year. Despite the severity of the contraction, it was 0.9 percentage point higher than the 4.4% contraction the IMF predicted in its October outlook due to stronger than expected momentum in the second half of the year. from last year.

The IMF noted that the contraction had “acute negative impacts” on women, children, the poor, informal workers and those working on a contract basis. He also said the strength of the economic recovery is likely to vary widely from country to country, depending on their access to medical interventions, the effectiveness of political support, exposure to international fallout and characteristics. structural aspects of the entry into the crisis.

The report states that policy actions should provide effective support until a recovery is firmly underway, and such actions should focus on “promoting the key imperatives of increasing potential output, ensuring participatory growth that benefits everyone and accelerates the transition to a lower dependence on carbon ”. The IMF reiterated an observation from its October report that a surge in green investment combined with moderate but rising carbon prices would bring about the necessary emission reductions while supporting the recovery from the pandemic recession.

“Strong multilateral cooperation is needed to bring the pandemic under control everywhere,” the report said. “Many countries, especially low-income developing economies, entered the crisis with high debt that is expected to increase further during the pandemic. The global community will need to continue to work closely together to ensure adequate access to international liquidity for these countries. “

The IMF has said that despite the heavy human toll from the pandemic, economic activity appears to increasingly adapt to a low-contact world. He also said that additional policy measures at the end of last year, especially in the United States and Japan, should provide additional support during this year and in the future to the global economy. As a result, there has been a more solid starting point for the global outlook 2021-2022 than was predicted in the previous forecast.

However, the upsurge in infections and new variants of the coronavirus, along with renewed lockdowns and problems with vaccine distribution, could negatively affect the outlook, the IMF said.

“Much remains to be done on the health and economic policy fronts to limit the lingering damage from the severe 2020 contraction and ensure a sustainable recovery,” the IMF said.

Related stories:

IMF expects worst economic fallout since Great Depression

Negative surprises prompt the IMF to downgrade its global growth forecasts

IMF Improves Global Growth Forecast But Still Sees Deep Recession

Tags: coronavirus, COVID-19, GDP, IMF, International Monetary Fund, pandemic, recession, recovery, vaccine, Global economic outlook

Leave a Reply

Your email address will not be published.