IMF increases global growth forecast, says crisis end is ‘increasingly visible’

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%.

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. 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%.

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, “policymakers will need to limit long-term economic scarring” from the crisis and boost public investment, it added. 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. The IMF’s latest forecasts confirm that the U.S. is on track to not only return but exceed its pre-pandemic performance this year.

IMF increases global growth forecast, says crisis end is ‘increasingly visible’, CNBC, Apr 6