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 coronavirus vaccines are administered around the world. He is, however, concerned about the risk that new variants of Covid pose to post-pandemic recovery.
According to its latest World Economic Outlook, published on Tuesday, the institution now expects the global economy to grow 5.5% this year – an increase of 0.3 percentage point from October’s forecasts. He sees global GDP (gross domestic product) growing 4.2% in 2022.
“Much now depends on the outcome of this race between a mutant virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens,” said IMF chief economist Gita Gopinath, in a blog.
“There remains enormous uncertainty and the prospects vary widely between countries.”
The world has seen an increase in the number of infections and deaths from Covid-19 in recent months, as new variants of the coronavirus have spread rapidly. These have been described as more infectious and potentially more deadly than the original strain.
As a result, many countries have increased their social restrictions, which has inflicted more economic suffering.
In fact, the IMF reduced its GDP projections for the eurozone this year by 1 percentage point. The 19-member region, which has been severely hit by the pandemic, is expected to grow 4.2% this year.
Germany, France, Italy and Spain – the four largest economies in the eurozone – have also seen their growth expectations reduced to 2021.
Economic activity in the region decelerated in the last quarter of 2020 and is expected to continue in the first part of 2021. The IMF does not expect the euro area economy to return to the levels of late 2019 before the end of 2022.
US growth revised upwards
On the other hand, the United States is expected to grow more than expected this year, according to the IMF.
The Fund revised its GDP forecast upward by 2 percentage points, due to a strong boost in the second part of 2020 and additional fiscal support. GDP is now at 5.1% this year.
The United States Congress approved nearly $ 900 billion in a stimulus package in December and President Joe Biden suggested that more aid packages could arrive soon.
Looking at emerging markets, China is expected to grow above 8% this year, said the IMF.
“China returned to the pre-pandemic level projected in the fourth quarter of 2020, ahead of all major economies. The United States is expected to exceed its pre-Covid levels this year, well ahead of the euro area,” said Gopinath on Tuesday. -market .
The IMF reiterated that governments will need to continue supporting their economies through fiscal stimulus to stimulate economic recovery.
“Policy actions must ensure effective support until recovery is firmly underway, with an emphasis on advancing the main imperatives of increasing potential production, ensuring participatory growth that benefits everyone and accelerating the transition to less carbon dependency ”Added Gopinath.