IMF Forecasts 6% Global Growth As Economies Reopen

The International Monetary Fund (IMF) Is sharply upgrading its economic outlook this year for the world’s wealthy countries, especially the United States, as COVID-19 vaccinations help sustain solid rebounds from the pandemic recession.

But the 190-country lending agency has downgraded its forecast for poorer countries, most of which are struggling to vaccinate, Paul Wiseman and Martin Crutsinger reported for the Associated Press (AP).

Overall, the IMF said Tuesday that it expects the global economy to expand 6% this year — a dramatic bounce-back from the 3.2% contraction in the pandemic year of 2020. The IMF’s forecast, unchanged from its previous estimate in April, would mark the fastest calendar-year global growth in records dating to 1980.

Beneath the worldwide number, however, a gap between the vaccine haves and have-nots is widening. The IMF expects advanced economies to grow 5.6% this year, an upgrade from the 5.1% it forecast in April, fueled by the swift recovery of consumers and businesses. But it downgraded its 2021 forecast for emerging markets and developing countries to 6.3% from its April forecast of 6.7%.

The US is expected to register 7% growth this year, a sharp reversal from last year’s 3.5% drop and an upgrade from the 6.4% growth the IMF had forecast for 2021 back in April.

President Joe Biden’s ambitious spending plans are expected to fuel growth this year and next. The IMF predicts that the US economy will grow 4.9% in 2022, up from the 3.5% it projected three months ago.

Gita Gopinath, the IMF’s chief economist, told reporters Tuesday that more needs to be done to supply vaccines to poorer nations that lag far behind wealthier nations. “The recovery is not assured until the pandemic is beaten back globally,” Gopinath said.

She asked that wealthy nations quickly fulfill their pledges to supply 1 billion does of the vaccine to developing nations. “Concerted, well-directed policy actions ... can make the difference between a future where all economies experience durable recoveries or one where divergence is intensified, the poor get poorer and social unrest and geopolitical tensions grow,” she said.

The 19 European countries that share the euro currency are forecast to grow 4.6% collectively this year, versus last year’s 6.5% contraction. Japan, which endured a 4.7% drop in economic growth in 2020, is expected to expand 2.8% this year. But the 2021 forecast for Japan marks a downgrade from what the IMF expected in April, reflecting a resurgence of COVID-19 cases earlier this year.

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