Published: Tue, April 06, 2021
Economy | By

International Monetary Fund upgrades global economic growth forecast for 2021 to record 6%

International Monetary Fund upgrades global economic growth forecast for 2021 to record 6%

Nonetheless, with the heft of the U.S. outlook improvement as the main driver, the International Monetary Fund marked up its advanced economy growth estimate to 5.1% from 4.3%.

The latest WEO showed that the United States would be the only large advanced economy projected to surpass the level of gross domestic product (GDP) it was forecast to have in 2022 in the absence of this pandemic.

The IMF also highlighted that income inequality would likely increase significantly, mainly due to the pandemic.

This year, only Turkey and Romania are projected to achieve higher growth rates, of 6%, and the Serbian economy is expected to grow at a rate of 5.0%.

The outlook for Britain is revised upward by 0.8 points to 5.3 percent.

Global recovery from the pandemic is expected to be asynchronous and uneven among advanced, emerging and frontier market economies as well as within regions, economies, sectors and firms. Moreover, the most recent International Monetary Fund forecast highlighted how the United States is expected to surpass its pre-pandemic GDP projection next year.

However, services trade "remains subdued", the IMF said, with worldwide travel at a near standstill since March 2020, causing particularly large losses in tourism-dependent countries.

The economic activity of the emerging European economies should rise by 4.4% this year, half a percentage point higher than projected last autumn, while next year it is expected to slow down to 3.9%. Both figures are upgrades, though the latter is only marginally higher than the January forecast.

"So, to make this a durable recovery, our hope is that fiscal measures and other support measures would work in the direction of supporting the recovery coming from the private sector, as opposed to the public sector", she said.

Meanwhile, the ASEAN-5 - Association of Southeast Asian Nations members Indonesia, Malaysia, the Philippines, Thailand and Vietnam - are projected to grow 4.9% collectively, after two downward revisions totaling 1.3 percentage points.

Global growth has been revised to 4.4% in 2022, and over the medium-term, it is expected to moderate to 3.3%. Its baseline projections assume that vaccine protection, together with improved testing and tracing, will reduce local coronavirus transmissions to low levels everywhere by the end of 2022. "Greater progress with vaccinations can uplift the forecast, while new virus variants that evade vaccines can lead to a sharp downgrade". The path of the pandemic and the ability of the authorities to provide policy support will be important for that outcome. "Our estimates suggest last year's severe collapse could have been three times worse had it not been for such support".

"Through this contribution, Team Europe continues to stand in solidarity with its most vulnerable partners", Jutta Urpilainen, European Commissioner for International Partnerships, has been quoted in the statement, "In this hard period, the resources freed up can provide social services for the most vulnerable people, such as access to essential healthcare and education for young people, including girls".

"Thanks to the ingenuity of the scientific community, hundreds of millions of people are being vaccinated, and this is expected to power recoveries in many countries later this year", IMF Chief Economist Gita Gopinath told a virtual press briefing during the World Bank/IMF Spring Meetings.

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