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 vaccinations are administered worldwide. However, it is concerned about the risk posed by the new Covid variants for post-pandemic recovery.
According to its latest global economic outlook, released on Tuesday, the institution now expects the global economy to grow by 5.5% this year – up 0.3 percentage points from the October forecast. Global GDP (gross domestic product) will expand by 4.2% in 2022.
“It now depends a lot on the outcome of this race between a mutant virus and vaccines to end the pandemic and the ability of politicians to provide effective support until this happens,” IMF chief economist Gita Gopinath said in a statement. blog post.
“It remains an extraordinary uncertainty, and the outlook varies greatly from country to country.”
In the last few months, the world has seen an increasing number of Covid-19 infections and deaths as new variants of the coronavirus have spread rapidly. They have been described as more infectious and potentially more deadly than the original strain.
As a result, many countries have intensified their social restrictions, which has caused even more economic pain.
In fact, the IMF cut its GDP forecast for the eurozone by 1 percentage point this year. The 19-member region, which was severely affected by the pandemic, is now expected to grow by 4.2% this year.
Germany, France, Italy and Spain – the four largest economies in the eurozone – have seen their growth expectations fall for 2021.
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 eurozone economy to return to levels from the end of 2019 before the end of 2022.
US growth has been revised
On the other hand, the United States will grow more than expected this year, according to the IMF.
The fund revised its GDP forecast by 2 percentage points, following a strong boost in the second half of 2020 and additional fiscal support. GDP is now observed at 5.1% this year.
The US Congress approved nearly $ 900 billion in a stimulus package in December, and President Joe Biden suggested that more aid packages could come soon.
Regarding emerging markets, China is expected to grow by more than 8% this year, the IMF said.
“China has returned to its projected pre-pandemic level in the fourth quarter of 2020, ahead of all major economies. The United States is expected to surpass its pre-Covid levels this year, well ahead of the eurozone,” Gopinath said on Tuesday. .
The IMF reiterated that governments will need to continue to support their savings through fiscal stimulus to support the economic recovery.
“Policy action should provide effective support until recovery begins firmly, with a focus on promoting key imperatives for increasing production potential, ensuring a participatory growth that benefits all and accelerating the transition to lower carbon dependence. Gopinath added.