Chattanooga Times Free Press

IMF upgrades forecast for 2021 global growth

- BY PAUL WISEMAN

The rollout of COVID19 vaccines and vast sums of government aid will accelerate global economic growth to a record high this year in a powerful rebound from the pandemic recession, the Internatio­nal Monetary Fund says in its latest forecast.

The 190-country lending agency said Tuesday that it expects the world economy to expand 6% in 2021, up from the 5.5% it had forecast in January. It would be the fastest expansion for the global economy in IMF records dating back to 1980.

In 2022, the IMF predicts, internatio­nal economic growth will decelerate to a still strong 4.4%, up from its January forecast of 4.2%.

“A way out of this health and economic crisis is increasing­ly visible,” IMF chief economist Gita Gopinath told reporters.

The agency’s economists now estimate that the global economy shrank 3.3% in 2020 after the devastatin­g recession that followed the coronaviru­s’ eruption across the world early last spring. That is the worst annual figure in the IMF’s database, though not as severe as the 3.5% drop it had estimated three months ago. Without $16 trillion in global government aid that helped sustain companies and consumers during COVID-19 lockdowns, IMF forecaster­s say, last year’s downturn could have been three times worse.

The U.S. economy, the world’s biggest, is now forecast to expand 6.4% in 2021 — its fastest growth since 1984 — and 3.5% in 2022. The U.S. growth is being supported by President Joe Biden’s $1.9 trillion relief package, while an accelerati­on in the administer­ing of vaccines is beginning to let Americans return to restaurant­s, bars, shops and airports in larger numbers.

The world’s secondlarg­est economy, China, which imposed a draconian COVID-19 clampdown a year ago and got a head start on an economic recovery, will record 8.4% growth this year and 5.6% in 2022, the IMF estimates.

The monetary fund expects the 19 countries that share the euro currency to collective­ly expand 4.4% this year and 3.8% in 2022. Japan is expected to register 3.3% growth this year and 2.5% next year.

Gopinath warned that the economic recovery is likely to be uneven. The rebound is expected to be slower in poor countries that can’t afford massive government stimulus and in those dependent on tourism. Economic damage from the health crisis is “reversing gains in poverty reduction” and last year increased the ranks of extreme poor by 95 million compared with pre-pandemic projection­s.

She also predicted that “many of the jobs lost are unlikely to return” — because of trends accelerate­d by the pandemic, such as stepped-up automation and a shift toward e-commerce and away from brick-and-mortar stores.

A faster recovery in the United States means U.S. interest rates could rise “in unexpected ways,” rattling financial markets and pulling investment out of hardhit, debt-ridden emerging markets.

In the IMF’s estimation, the global rebound will gradually lose momentum and return to pre-COVID levels of just above 3% growth. Countries will again encounter the obstacles they faced before the pandemic, including aging work forces in most rich countries and in China.

 ?? ODESSA AMERICAN VIA AP/ELI HARTMAN ?? The sun rises behind oil rigs sitting in storage Feb. 6, at a yard outside of Odessa, Texas. The OPEC oil cartel and allied countries said Thursday they have decided to gradually add back some 2 million barrels per barrel a day of oil production from May to July, moving cautiously in pace with the recovery of the global economy from the COVID-19 pandemic.
ODESSA AMERICAN VIA AP/ELI HARTMAN The sun rises behind oil rigs sitting in storage Feb. 6, at a yard outside of Odessa, Texas. The OPEC oil cartel and allied countries said Thursday they have decided to gradually add back some 2 million barrels per barrel a day of oil production from May to July, moving cautiously in pace with the recovery of the global economy from the COVID-19 pandemic.

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