IMF caution over global downturn and poverty
THE International Monetary Fund on Tuesday (26) raised its forecast for global economic growth in 2021 and said the coronavirustriggered downturn in 2020 would be nearly a full percentage point less severe than expected.
It said multiple vaccine approvals and the launch of vaccinations in some countries in December had boosted hopes of an eventual end to the pandemic that has now infected nearly 100 million people and claimed the lives of over 2.1 million globally.
But it warned that the world economy continued to face “exceptional
uncertainty” and new waves of Covid-19 infections and variants posed risks, and global activity would remain below pre-Covid projections made a year ago.
Close to 90 million people are likely to fall below the extreme poverty threshold during 20202021, with the pandemic wiping out progress made in reducing poverty over the past two decades. Large numbers of people remained unemployed and underemployed in many countries, including the United States.
In its latest World Economic Outlook, the IMF forecast a 2020 global contraction of 3.5 per cent, an improvement of 0.9 percentage points from the 4.4 per cent slump predicted in October, reflecting stronger-than-expected momentum in the second half of 2020.
It predicted global growth of 5.5 per cent in 2021, an increase of 0.3 percentage points from the October forecast, citing expectations of a vaccine-powered uptick later in the year and added policy support in the US, Japan and a few other large economies.
It said the US economy was expected to grow by 5.1 per cent in 2021, an upward revision of two percentage points attributed to carryover from strong momentum in the second half of 2020 and the benefit accruing from $900 billion (£655bn) in additional fiscal support approved in December.
In Europe, however, where governments have ordered new lockdowns and even curfews amid surging cases, the IMF slashed growth forecasts.
The euro area growth estimate was cut a full point to 4.2 per cent, with significant downgrades for Germany, France, Spain and Italy.
The IMF cut the forecast for Britain as well.