LONDON – The International Monetary Fund expects a stronger economic recovery in 2021 as the introduction of Covid-19 vaccines begins. However, he warns of “formidable challenges” given the varying frequency of gunshots around the world.
The organization expects the global economy to grow 6% in 2021 on Tuesday, compared with 5.5% in January. Looking ahead, global GDP will rise 4.4% in 2022, above an earlier estimate of 4.2%.
“Despite the great uncertainty about the course of the pandemic, a way out of this health and economic crisis is becoming increasingly visible,” said IMF chief economist Gita Gopinath in the latest report on the world economic outlook.
The recent round of fiscal stimulus in the US, as well as the global launch of vaccines, have made the group more confident about the global economy this year.
Income inequality within the country is likely to increase as young workers and those with relatively low skills are more affected not only in advanced but also in emerging markets and developing countries.
Gita Gopinath
IMF chief economist
“However, the outlook poses formidable challenges related to varying rates of recovery across and within countries and the potential for continued economic damage from the crisis,” added Gopinath.
The IMF estimated the advanced economies to grow 5.1% that year, while the United States expanded 6.4%.
The logo of the International Monetary Fund at its headquarters in Washington, DC
Thomas Trutschel | Photo library | Getty Images
The group’s forecast for emerging and developing countries growth for 2021 is 6.7%, with India expected to grow up to 12.5%.
“Income inequality within the country is likely to increase as young workers and people with relatively low skills are more affected not only in advanced but also in emerging markets and developing countries,” warned Gopinath, adding that lower levels of female employment also affect the population Sharpen differences.
As a result, the IMF said governments should continue to focus on “escaping the crisis” by providing fiscal support, including to their health systems. In a second phase, “policy makers need to limit the long-term economic scars of the crisis” and stimulate public investment, he added.
“Without additional efforts to give everyone a fair shot, the differences in living standards between countries could widen significantly and decades of global poverty alleviation trends could be reversed,” said Gopinath.
Recovery in the USA
Recent projections suggest the United States is well positioned to see a solid economic recovery in 2021, unlike much of the world, which will likely take longer to return to pre-crisis levels.
The positive outlook for the US is largely due to President Joe Biden’s $ 1.9 trillion coronavirus rescue package that went into effect 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 projections by the IMF.
In February Treasury Secretary Janet Yellen said the US could return to full employment in 2022. “There’s absolutely no reason why we should have a long, slow recovery,” she told CNN at the time.
The latest IMF projections confirm that the US is on track to not only return but surpass its pre-pandemic performance this year.
“Among advanced economies, the United States is expected to surpass its pre-Covid GDP levels this year, while many others in the group will not return to pre-COVID levels until 2022,” Gopinath said.
Comments are closed.