After COVID-19 crash, International Monetary Fund tips record global economic growth for 2021

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The outlook for Britain is revised upward by 0.8 points to 5.3 percent.

CARE Ratings Chief Economist Madan Sabnavis said 12.5 per cent economic growth for India in the current financial year was "very unlikely", as rising Covid-19 cases were resulting in regional lockdowns. "This makes the United States the only large economy projected to surpass the level of GDP it was estimated to have in 2022 in the absence of this pandemic", she said. China comes closest, with a forecast of 8.4 per cent economic expansion.

Meanwhile, China's economy, one of few that grew a year ago, will expand 8.4 percent in 2021, the International Monetary Fund said.

Britain has suffered Europe's highest coronavirus death toll and its economy shrank by nearly 10 per cent past year, the worst performance among the region's big economies except for Spain.

The United States and China, the world's two biggest economies, are likely to grow by 6.4 per cent and 8.4 per cent, respectively, in 2021, driving the global rebound if pandemic-related economic curbs can be rolled back, the International Monetary Fund said in a report published on Tuesday.

The IMF's projection is more sanguine compared to the 3 percent growth estimate by the Bank of Korea and the 3.2 percent growth forecast made by South Korea's Finance Ministry.

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China - the only major economy that grew in 2020, at 2.3% - will be a key engine in Asia this year, with GDP now poised to surge 8.4%.

Croatia's current account deficit is forecast at 2.3% of GDP this year, which is 0.8 percentage points lower than in the October report. However, still high Covid-19 caseloads in some large countries in 2020:Q1 (such as Indonesia and Malaysia) put a lid on the growth prospects, it mentioned. In 2020, the inflation rate was 0.3% as forecast in October, while in 2022 consumer prices are expected to pick up to 1.2%. "In parallel, adaptation to pandemic life has enabled the global economy to do well despite subdued overall mobility, leading to a stronger-than-expected rebound, on average, across regions", it said. "While some countries will get to widespread vaccinations by the summer, most will likely have to wait till the end of next year", Gopinath added.

This was due to "projected damage to supply potential and forces that predate the pandemic, including aging-related slower labor force growth in advanced economies and some emerging market economies", the Fund said, but noted that "thanks to unprecedented policy response, the Covid-19 recession is likely to leave smaller scars than the 2008 global financial crisis".

But it has moved more quickly than nearly all other countries with its coronavirus vaccination programme.

Gopinath also observed that countries could have been forced to claw out of even deeper economic holes, without the swift policy support implemented previous year.

The new global forecasts are growth of 6% and 4.4% this year and next. "However, emerging market economies and low-income developing countries have been hit harder and are expected to suffer more significant medium-term losses". "Close to 95 million more people are estimated to have fallen below the threshold of extreme poverty in 2020 compared to pre-pandemic projections", the report read. As a whole, emerging and developing economies are expected to grow 6.7%, up from a 6.3% forecast in January.

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