Europe

Global GDP to hit 6%

LONDON — The International Monetary Fund is expecting a stronger economic recovery in 2021 as Covid-19 vaccine rollouts get underway, but it warns of “daunting challenges” given the different rates of administering shots across the globe. 

The organization said Tuesday it expects the world economy to grow by 6% in 2021, up from its 5.5% forecast in January. Looking further ahead, global GDP for 2022 is seen increasing by 4.4%, higher than an earlier estimate of 4.2%.

“Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible,” IMF chief economist Gita Gopinath said in the latest World Economic Outlook report.

The latest round of fiscal stimulus in the U.S., along with the vaccine rollouts across the world, have made the group more confident about the global economy this year.

Within-country income inequality will likely increase because young workers and those with relatively lower skills remain more heavily affected in not only advanced but also emerging markets and developing economies.

Gita Gopinath

IMF chief economist

“Nonetheless, the outlook presents daunting challenges related to divergences in the speed of recovery both across and within countries and the potential for persistent economic damage from the crisis,” Gopinath added.

The IMF estimated growth of 5.1% for advanced economies this year, with the United States expanding by 6.4%.

The International Monetary Fund’s logo at its headquarters in Washington, D.C.

Thomas Trutschel | Photothek | Getty Images

The group’s forecast for emerging and developing economies’ growth is 6.7% for 2021, with India expected to expand by as much as 12.5%.

“Within-country income inequality will likely increase because young workers and those with relatively lower skills remain more heavily affected in not only advanced but also emerging markets and developing economies,” Gopinath warned, adding that lower levels of female employment was also exacerbating disparities.

As a result, the IMF said governments should continue to focus on “escaping the crisis” by providing fiscal support, including to their health-care systems. In a second phase, “policymakers will need to limit long-term economic scarring” from the crisis and boost public investment, it added.

“Without additional efforts to give all people a fair shot, cross-country gaps in living standards could widen significantly, and decades-long trends of global poverty reduction could reverse,” Gopinath said.

Recovery in the U.S.


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