IMF: World Economic Growth in 2021 To Outpace Initial Expectations by 0.5%
On Tuesday, April 6, the International Monetary Fund published their projections of the world economic growth in 2021. According to its forecast, the world economy will grow by 6%, up from the January prediction of 5.5%.
The IMF states that the reasons for the revision of its previous projections are the increased financial support in some of the large economies, expected effects of the COVID-19 vaccine rollout, and further adaptation of the economy to reduced mobility caused by lockdowns. The US has been particularly supportive of its private sector, providing massive loans and debating debt forgiveness. As for the year 2022, the IMF predicts the global economy growing 4.4%, which is also an increase from previous assessments.
The estimated growth of advanced economies in 2021 is 5.1%, with the US economy increasing by 6.4%. This is the fastest growth pace of the American economy since 1984.
Developing economies are expected to experience considerable growth as well, with the IMF projecting an increase of 6.7%. India is the real winner here, with a projected growth rate of 12.5%.
These new, optimistic projections are not that surprising. We’ve already seen forecasts for the world’s largest economy - the United States - change from grim to wildly optimistic. The IMF’s chief economist, Gita Gopinath, stated that “Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible.”
However, the IMF also points out that there are significant challenges ahead caused by the uneven distribution of vaccines around the world. Rich countries are hoarding vaccines, making it hard or even impossible for poorer states to obtain them. Near the end of 2020, 14% of the world population had control over 53% of all COVID-19 vaccines. The United States is one of the biggest offenders here, jealously sitting on top of a massive vaccine supply. The COVAX system, which was supposed to guarantee equitable distribution of vaccines around the world, has apparently failed to do so.
While the economic projections certainly look favorable, it’s important not to lose sight of uneven vaccine distribution’s potential human toll.
Image credit: Wikimedia Commons, author Ken Nakagawa, licensed under the Creative Commons Attribution-Share Alike 4.0 International license.
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.
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