Gita Gopinath, Chief Economist of the International Monetary Fund.
ANDREW CABALLERO-REYNOLDS | AFP | Getty Images
LONDON – The International Monetary Fund has become more optimistic about the global economy as vaccinations against the coronavirus are being administered around the world. However, it is concerned about the risk that new Covid variants pose to pandemic recovery.
According to the latest World Economic Outlook, released Tuesday, the institution now expects the global economy to grow by 5.5% this year – an increase of 0.3 percentage points from the October forecast. It sees global GDP (gross domestic product) grow by 4.2% in 2022.
“Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and the policy’s ability to provide effective support up to that point,” said chief economist Gita Gopinath. from the IMF in a blog post.
“There remains enormous uncertainty and the outlook varies widely from country to country.”
The world has seen a rising number of Covid-19 infections and deaths in recent months as new variants of the coronavirus have spread rapidly. These have been described as more contagious and are potentially more deadly than the original species.
As a result, many countries have stepped up their social constraints, causing even more economic pain.
In fact, the IMF has cut its GDP forecast for the eurozone by 1 percentage point this year. The 19-member region, which has been badly affected by the pandemic, is expected to grow by 4.2% this year.
Germany, France, Italy and Spain – the four largest economies in the eurozone – also saw their growth expectations for 2021 lower.
Economic activity in the region slowed in the last quarter of 2020 and is expected to continue in the first half of 2021. The IMF does not expect the euro area economy to return to the level of late 2019 before the end of 2022.
US growth adjusted
On the other hand, the United States will grow more than expected this year, the IMF said.
The fund revised its GDP forecast upward by 2 percentage points thanks to strong momentum in the second half of 2020 and additional fiscal support. GDP this year is now 5.1%.
The US Congress approved a stimulus package of nearly $ 900 billion in December, and President Joe Biden has suggested that more aid packages could come soon.
Looking at emerging markets, China will grow more than 8% this year, the IMF said.
“China returned to its pre-pandemic expected levels for all major economies in the fourth quarter of 2020. The United States is expected to surpass pre-Covid levels this year, well ahead of the euro area,” Gopinath said Tuesday. .
The IMF reiterated that governments will need to continue to support their economies through fiscal stimulus measures to support the economic recovery.
“Policies should provide effective support until recovery is firmly underway, with a focus on promoting essential requirements to increase potential output, ensure participatory growth that benefits all, and the transition to lower carbon dependency speed up, ”added Gopinath.