The International Monetary Fund announced today (Tuesday, April 6) that it expects a more robust economic recovery in 2021 than previously thought.
Vaccine distribution is a leading factor in the positive outlook.
The organization says it expects the world economy to grow by 6% this year, up from the 5.5% forecast from January.
Global GDP for 2022 is expected to increase by 4.4%, up from the earlier estimate of 4.2%.
IMF Chief Economist Gita Gopinath said, “even with the high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible.”
Significant factors include the latest stimulus payments in the US and vaccine distribution globally.
Gopinath also stated that “the outlook presents daunting challenges related to divergences in the speed of recovery both across and within countries and the potential for persistent economic damage from the crisis.”
The IMF has estimated growth of 5.1% for advanced economies this year, with a specific number of 6.4% for the United States.
The IMF’s forecast for emerging and developing countries is 6.7% in 2021, with India expected to expand by 12.5%.
“Within-country income inequality will likely increase because young workers and those with relatively lower skills remain more heavily affected in not only advanced but also emerging markets and developing economies,” Gopinath warned, adding that lower levels of female employment was also exacerbating disparities.
The IMF said governments should continue the focus on escaping the crisis by expanding fiscal support and improvements to health care.
“Without additional efforts to give all people a fair shot, cross-country gaps in living standards could widen significantly, and decades-long trends of global poverty reduction could reverse,” Gopinath said.
The latest IMF forecasts suggest that the US should experience economic recovery in 2021, in contrast to much of the world, where it is likely to take longer to return to pre-pandemic levels.
The group lists the $1.9 trillion coronavirus rescue package as a significant player in the coming recovery.
IMF is also projecting that unemployment in the US should fall from 8.1% in 2020 to 5.8% in 2021 and 4.1% in 2022.
In February, Treasury Secretary Janet Yellen said that the US could return to full employment in 2022.
In its latest forecasts, the IMF has confirmed that the US is on track to exceed its pre-pandemic performance this year.
“Among 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.