Global GDP will reach 6%
LONDON – The International Monetary Fund expects a stronger economic recovery in 2021 with the launch of the Covid-19 vaccine, but it warns of “significant challenges” given the different rates of vaccine delivery across the world.
The organization said on Tuesday it expected the global economy to grow 6% in 2021, compared to its forecast of 5.5% in January. Longer term, global GDP for 2022 is expected to grow by 4.4%, which is higher than an earlier estimate of 4.2%.
“Even with great uncertainty on the path to the pandemic, a way out of this health and economic crisis is increasingly visible,” IMF chief economist Gita Gopinath said in the latest Outlook report. the global economy.
The latest round of fiscal stimulus in the United States, along with vaccine deployments around the world, have made the group more confident in the global economy this year.
“Nonetheless, the outlook presents significant challenges related to divergences in the speed of recovery both between and within countries and the potential for continued economic damage from the crisis,” Gopinath added.
The IMF estimated growth of 5.1% for advanced economies this year, with the United States advancing 6.4%.
The logo of the International Monetary Fund at its headquarters in Washington, DC
Thomas Trutschel | Photothek | Getty Images
The group’s forecast for growth in emerging and developing economies is 6.7% for 2021, with India expected to increase by 12.5%.
“Income inequality within countries is likely to increase because younger workers and those with relatively lower skills will remain more heavily affected not only in advanced markets, but also in emerging and developing countries,” Gopinath warned. , adding that declining employment levels for women also exacerbate disparities.
As a result, the IMF said governments should continue to focus on “escaping the crisis” by providing fiscal support, including to their health care systems. In a second phase, “political decision-makers will have to limit the long-term economic scars” of the crisis and stimulate public investment, he added.
“Without further efforts to give everyone a fair chance, the differences in living standards between countries could widen significantly, and the trends of decades of reducing global poverty could be reversed,” said Gopinath.
Recovery in the United States
The latest forecast suggests that the United States is well positioned for a solid economic recovery in 2021, unlike much of the world, where it will likely take longer to return to pre-crisis levels.
The positive assessment for the United States is heavily driven by President Joe Biden’s $ 1.9 trillion coronavirus rescue package, which went into effect last month.
Unemployment in the United States is expected to drop from 8.1% in 2020 to 5.8% this year and 4.1% in 2022, according to the latest IMF projections.
In February, Treasury Secretary Janet Yellen said the United States could return to full employment in 2022. âThere absolutely is no reason why we should be suffering from a long, slow recovery, âshe told CNN at the time.
The latest IMF forecast confirms that the United States is on track not only to come back, but also to exceed its pre-pandemic performance this year.
“Among advanced economies, the United States is expected to surpass its pre-Covid GDP level this year, while many other members of the group will not return to their pre-COVID levels until 2022,” Gopinath said.