IMF lifts forecasts for rich, cuts for developing nations

The International Monetary Fund on Tuesday maintained its 6 per cent global growth forecast for

2021, upgrading its outlook for the United States and other wealthy economies but cutting estimates for several developing countries struggling with surging Covid-19 infections.

The divergence is based largely on better access to

Covid-19 vaccines and continued fiscal support in advanced economies, while emerging markets face difficulties on both fronts, the IMF said in an update to its World Economic Outlook.

"Close to 40 per cent of the population in advanced economies has been fully vaccinated, compared with

11 per cent in emerging market economies, and a tiny fraction in low-income developing countries," Gita Gopinath, the IMF's chief economist, said in a statement accompanying the report.

"Faster-than-expected vaccination rates and return to normalcy have led to upgrades, while lack of access to vaccines and

renewed waves of Covid-19 cases in some countries, notably India, have led to downgrades," she said.

The IMF significantly raised its forecasts for the US, which it now expects to grow at 7 per cent in 2021 and 4.9 per cent in 2022— up 0.6 and 1.4 percentage points, respectively, from the forecasts in April. The projections assume the US Congress will approve President Joe Biden's roughly $4 trillion in proposed infrastructure, education and family support spending largely as envisioned by the White House.

Positive spillovers from the US spending plans, along with expected progress in Covid-19 vaccination rates, are boosting the IMF's 2022 global growth forecast to 4.9 per cent, up 0.5 percentage point from April.