International Monetary Fund logo at its headquarters in Washington, DC
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LONDON – The International Monetary Fund expects a stronger economic recovery in 2021 with the launch of the Covid-19 vaccine, but warns of “daunting challenges” given the various rates of vaccine administration around the globe.
On Tuesday, the organization said it expects the world economy to grow by 6% in 2021, up from 5.5% in January. Looking ahead, global GDP (gross domestic product) for 2022 is seen growing by 4.4%, higher than a previous estimate of 4.2%.
“Even with great uncertainty about the path of the pandemic, a way out of this economic and health crisis is increasingly visible,” IMF chief economist Gita Gopinath said in the latest outlook report. world economic.
The latest round of US tax incentives, along with vaccine launches around the world, have made the group more confident in the global economy this year.
Income inequality is likely to increase as young workers and those with relatively lower skills remain more severely affected not only in advanced markets but also in emerging markets and developing economies.
Gita gopinath
Chief Economist of the IMF
“However, the outlook presents daunting challenges related to divergences in the speed of recovery both within and within countries and the potential for persistent economic damage from the crisis,” Gopinath added.
The IMF has estimated 5.1% growth for advanced economies this year, with the United States rising 6.4%.
Meanwhile, the group’s forecast for the growth of emerging and developing economies is 6.7% for 2021, with India set to expand by up to 12.5%.
“Income inequality in the country is likely to increase as young workers and those with relatively low skills remain more severely affected not only in advanced markets but also in emerging markets and developing economies,” Gopinath warned, adding that higher levels low employment rates also exacerbate disparities.
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 will have to limit the long-term economic scars” of the crisis and stimulate public investment, she added.
“Without additional efforts to deliver a fair blow to all people, the national disparities in living standards could widen significantly, and decades of global poverty reduction trends could reverse,” Gopinath said.
Recovery in the USA
Recent forecasts suggest that the United States is well placed to experience a solid economic recovery in 2021, unlike much of the world, where it may take longer to return to pre-crisis levels.
The positive assessment for the US is strongly driven by the $ 1.9 trillion coronavirus rescue package, President Joe Biden, which went into effect last month.
As such, unemployment in the United States is expected to fall from 8.1% in 2020 to 5.8% this year and 4.1% in 2022, according to the latest IMF projections.
In February, Treasury Secretary Janet Yellen said the United States could return to full employment in 2022. “There is absolutely no reason why we should suffer a slow and long recovery,” she said. for CNN at the time.
The latest IMF forecasts confirm that the US is not only returning, but to surpass its pre-Covid levels this year.
“Among the advanced economies, the United States expects to exceed its pre-Covid GDP level this year, while many others in the group will return to their pre-COVID levels only in 2022,” Gopinath added.