IMF Maintains Its 6% Global Growth Forecast, Warns of a Lopsided Economic Recovery
In its latest World Economic Outlook Update, the International Monetary Fund stuck to its 2021 global growth forecast of 6%, mostly because developed economies, including the US, expect slightly faster growth than the global body previously anticipated. But growth in emerging economies is expected to be sluggish, resulting in a lopsided global recovery.
The IMF is warning of a widening gap between rich and poor amid the COVID-19 pandemic as vaccination rates in developing countries remain low. This is fuelling concerns over more contagious variants of the virus posing a threat to recovery. The body called on nations to work together on accelerating the protection of all citizens.
“This would save countless lives, prevent new variants from emerging, and add trillions of dollars to global economic growth. [...] Multilateral action is needed to ensure rapid, worldwide access to vaccines, diagnostics, and therapeutics,” said Gita Gopinath, the IMF’s chief economist.
According to the IMF’s predictions for 2021, the US economy is expected to expand 7%. Europe is expected to grow 4.6%, while Japan’s economy is projected to expand 2.8%. Rapid expansion was expected for China at 8.1% and India at 9.5%, but the initial outlooks for those two economies have been downgraded since April. The forecasts for China changed because of a scaling back of public investment, while India was downgraded because of a severe second COVID-19 wave slowing the recovery.
With a growth of 4.9%, the global expansion in 2022 is now forecast to be stronger than previously projected. That, too, the I.M.F. predicts, will be led by more developed economies.
More than a year and a half after the start of the pandemic, it’s become apparent that an economic recovery requires more than governments providing fiscal support and business loans. It also hinges on the successful acquisition and deployment of vaccines. According to the IMF, about 40% of the population in advanced economies had been fully vaccinated, while that figure is just 11% or less in developing economies.
Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.
