The International Monetary Fund is expecting a stronger economic recovery in 2021 as Covid-19 vaccine rollouts get underway, but it warns of “daunting challenges” given the different rates of administering shots across the globe.
The organization said Tuesday it expects the world economy to grow by 6% in 2021, up from its 5.5% forecast in January. Looking further ahead, global GDP for 2022 is seen increasing by 4.4%, higher than an earlier estimate of 4.2%.
“Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible,” IMF chief economist Gita Gopinath said in the latest World Economic Outlook report.
The latest round of fiscal stimulus in the U.S., along with the vaccine rollouts across the world, have made the group more confident about the global economy this year.
Within-country income inequality will likely increase because young workers and those with relatively lower skills remain more heavily affected in not only advanced but also emerging markets and developing economies. Gita Gopinath, IMF Chief Economist
The IMF estimated growth of 5.1% for advanced economies this year, with the United States expanding by 6.4%.
The group’s forecast for emerging and developing economies’ growth is 6.7% for 2021, with India expected to expand by as much as 12.5%.
Recovery in the U.S.
The latest forecasts suggest that the United States is well placed to experience a solid economic recovery in 2021, in contrast to much of the world, where it’s likely to take longer to return to precrisis levels.
The positive assessment for the U.S. is highly driven by President Joe Biden’s $1.9 trillion coronavirus rescue package, which came into force last month.
Unemployment in the United States is expected to fall from 8.1% in 2020 to 5.8% this year and to 4.1% in 2022, according to the latest IMF projections.
IMF raises its growth forecast for UK economy after 2020 crash
The International Monetary Fund raised its forecast for British economic growth which is set to outpace the euro zone this year after its slump in 2020 but is unlikely to regain its pre-pandemic size until some time in 2022.
The IMF said Britain’s economy would grow by 5.3% in 2021, up from a previous forecast of 4.5% it made in January, helped by the country’s fast COVID-19 vaccination programme and a latest round of stimulus by the government.
Britain has suffered Europe’s highest COVID-19 death toll and its economy shrank by almost 10% last year, the worst performance among the region’s big economies except for Spain.
For 2022, the IMF raised its forecast to British economic growth slightly to 5.1% which would be the strongest expansion among Europe’s big economies next year, according to the Fund.
Reference: CNBC, Reuters
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