April 20, 2021

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IMF raises global economic growth forecast for this year and next, but the risk of unbalanced recovery increases

IMF
The cumulative loss of per capita income in advanced economies next year will reach 11% forecasts IMF

Governments around the world have offered about 16 trillion US dollars in fiscal measures, including the US will implement a US$1.9 trillion economic rescue plan, and the increase in coronavirus vaccination in larger economies is conducive to economic rebound. The IMF predicted in January that the global economic growth rate this year was 5.5%, and now it is expected that growth will accelerate further.

The International Monetary Fund (IMF) has raised its global economic growth forecast for this year and next. However, IMF President Georgieva pointed out that economic growth led by China and the United States is accelerating, which has aggravated the global recovery. Balancing the risks.

Georgieva said in an online opening speech for the IMF and World Bank spring meeting: “In January, we expect the global economic growth rate in 2021 to be 5.5%…We now expect growth to accelerate further.”

She said that the IMF will raise expectations for global economic growth in the Global Economic Outlook to be released next week. In January, the Fund’s forecast for next year’s growth rate was 4.2%.

The better-than-expected global economic growth is partly due to the government’s offering of approximately US$16 trillion in fiscal measures, including the US President Biden’s US$1.9 trillion economic rescue plan, as well as the Increased vaccination against coronavirus in the economy is conducive to the economic rebound.

The cumulative loss of per capita income in advanced economies next year will reach 11%

Georgieva pointed out that the global economy has gained a firm foothold. However, the development between countries in various regions, and even between different regions of the same country, is showing a trend of differentiation. It is a recovery of “coexistence of multiple speeds”, especially dependent on the two engines of China and the US. By the end of 2021, there are only a handful of countries that can achieve gross domestic product (GDP) far exceeding the pre-crisis level, and China and the United States are two of them.

Georgieva said that the IMF expects that by next year, the cumulative loss of per capita income in advanced economies will reach 11%, and the loss in emerging markets and developing economies other than China will be even more serious, estimated to be 20%. . “This loss of income means that millions of people will fall into poverty, become homeless, and go hungry.”

Georgieva pointed out that the biggest danger currently facing is “extremely high uncertainty”, and the future depends to a large extent on the development path of the epidemic. For now, uneven vaccination progress and the emergence of mutant strains are hindering economic growth, especially in Europe and Latin America. Weak emerging markets, low-income and fragile countries will also face greater pressure.

European countries are on a “steady road to recovery” and are expected to rebound in the second half of 2021, driven by increased vaccination efforts. The IMF predicts that the recovery of European countries will be “a quarter slower” than that of the United States.

Georgieva pointed out that the world is at an extremely important turning point, much like the situation when the IMF and the World Bank were established in 1945. Regarding the current crisis, Georgieva believes that strong policies must be formulated to ensure recovery and give the people a fair chance. First, focus on getting rid of the epidemic crisis; second, provide policy guarantees for economic recovery; third, invest in the future to create a new momentum for a greener, smarter, and more inclusive economy.

The spring meeting of the IMF and the World Bank this year is scheduled to be held online from April 5th to 11th.

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