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LONDON – The International Monetary Fund expects a stronger economic recovery in 2021 as Covid-19 vaccine implementations begin, but warns of “daunting challenges” given the different rates of gun administration around the world.
The organization said Tuesday it expects the global economy to grow 6% in 2021, compared to the 5.5% forecast in January. Looking to the future, world GDP for 2022 is set to increase 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 report on the global economic outlook.
The latest round of fiscal stimulus in the United States, along with the deployment of vaccines around the world, have made the group more confident about the world economy this year.
Income inequality within countries is likely to increase as young workers and those with relatively low skills continue to be more 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 at home 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 a U.S. expansion of 6.4%.
The group’s forecast for the growth of emerging and developing economies is 6.7% by 2021, and India is expected to expand to 12.5%.
“Income inequality within the country is likely to increase as young workers and people with relatively low skills remain more affected not only in advanced markets but also in emerging markets and developing economies,” Gopinath warned, which added that lower levels of female employment also exacerbated disparities.
As a result, the IMF said governments should continue to focus on “escaping the crisis” by providing fiscal support, including their health systems. In a second phase, “policymakers will have to limit the long-term economic scar” of the crisis and boost public investment, he added.
“Without additional efforts to give an equitable opportunity to all people, differences in living standards between countries could increase significantly and decades-long trends of global poverty reduction could reverse,” Gopinath said.
Recovery in the US
Recent forecasts suggest that the United States is well positioned to experience a solid economic recovery in 2021, in contrast to much of the world, where it is likely to take longer to return to pre-crisis levels.
The U.S. positive valuation is heavily driven by President Joe Biden’s $ 1.9 trillion coronavirus rescue package, which went into effect last month.
Unemployment in the United States is projected 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 long slow recovery,” she said at the time. on CNN.
The latest IMF forecasts confirm that the United States is not only returning, but surpassing its pre-pandemic performance this year.
“Among the advanced economies, the United States is expected to surpass its pre-Covid GDP level this year, while many others in the group will return to their pre-COVID levels only in 2022,” Gopinath said.