Tag: IMF

WASHINGTON — The rollout of COVID-19 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 second-largest 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 hard-hit, 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. Paul Wiseman, The Associated Press
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(Bloomberg) — The International Monetary Fund upgraded its global economic growth forecast for the second time in three months, while warning about widening inequality and a divergence between advanced and lesser-developed economies.The global economy will expand 6% this year, up from the 5.5% pace estimated in January, the IMF said in its World Economic Outlook published on Tuesday. That would be the most in four decades of data, coming after a 3.3% contraction last year that was the worst peacetime decline since the Great Depression.The IMF sees advanced economies less affected by the virus this year and beyond, with low-income countries and emerging markets suffering more — a contrast to 2009, when rich nations were hit harder. With U.S. gross domestic product next year forecast to be even bigger than projected before Covid-19, the IMF’s projections show little residual scarring from the pandemic for the world’s No. 1 economy.The fund, which with the World Bank is holding its spring meetings virtually this week, underscored that policy makers should scale back government support “gradually,” to avoid “fiscal cliffs.” Central bankers should also give “clear forward guidance” on monetary policy to minimize the danger of disruptive capital flows.The IMF reiterated its call for wealthy nations to help poorer ones combat Covid-19, and underlined the need to prioritize health-care spending more broadly to defeat the pandemic. President Joe Biden’s $1.9 trillion stimulus package passed last month will help boost U.S. GDP to above its pre-pandemic level this year and will have sizable positive spillovers for trading partners. It will next year make the U.S. the only large economy to surpass the level of output it would have had in the absence of the pandemic, IMF Chief Economist Gita Gopinath said in a briefing with reporters.For 2022, the fund saw global growth at 4.4%, higher than the 4.2% previously projected.Still, many advanced economies will not return to their pre-pandemic output levels until 2022, the IMF said, and emerging-market and developing economies may take until 2023 to recover those levels. The world economy in 2024 will be about 3% smaller than anticipated before the Covid-19 outbreak, the IMF said last week.“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,” Gopinath said in the report.Much of the focus of this week’s meetings will be on the IMF’s proposed $650 billion issuance of reserve assets known as special drawing rights, which aims to boost global liquidity and help emerging and low-income nations deal with mounting debt and Covid-19 health-care costs.The response to last year’s crisis by policy makers prevented a collapse that would have been at least three times worse, and the medium-term losses for the global economy are expected to be smaller than the global financial crisis a decade ago, the IMF said Tuesday.Related: IMF Says Fed Surprises Can Trigger Emerging-Market OutflowsThe divergent recovery paths are likely to widen the global gap in living standards, the IMF said. The fund estimated per-capita income losses over the 2020-22 period in emerging and developing markets excluding China at the equivalent of 20% of the per-capita GDP figures for 2019. That’s much worse than the 11% the IMF sees in advanced economies.Among other findings:About 95 million people are estimated to have fallen into extreme poverty in 2020The number of undernourished people is calculated to have grown by 80 millionGlobally, economies dependent on tourism face a particularly difficult recovery outlook given the slow pace of normalization of cross-border travel expected, the fund noted.But in advanced economies, pent-up demand will drive growth based on savings from 2020, as vulnerable people get vaccinated and contact-intensive industries resume, the IMF said.Among the forecasts released Tuesday:Advanced economies will expand 5.1% this year, compared with the 4.3% previously seenEmerging market and developing economies will grow 6.7%, up from 6.3%U.S. is seen at 6.4%, up from 5.1% in January. The fund previously calculated the stimulus enacted in March will boost U.S. output by a cumulative 5% to 6% over three yearsThe euro area will expand 4.4%, up from the 4.2% previously seenJapan will grow 3.3%, compared with 3.1%China is seen expanding 8.4%, up from 8.1%India will grow 12.5%, up from 11.5%The IMF flagged the risk that, if virus mutations outpace the roll-out of vaccines, Covid-19 could become an endemic disease with an unknown severity.Meantime, inflation data globally could turn volatile in the coming months, given record-low commodity prices a year ago, but the trend should prove short-lived, the IMF said. The muted outlook reflects a weak labor market, high unemployment and little worker bargaining power.Global trade volume is expected to accelerate 8.4% this year on a rebound in goods purchases, up from the 8.1% gain seen in January.Separately, in its Global Financial Stability Report, the IMF cautioned that the global economy could still face some bumps in the road as the unprecedented flood of government support produces unintended consequences.“Excessive risk taking in markets is contributing to stretched valuations, and rising financial vulnerabilities may become structural legacy problems if not addressed,” the report said.(Updates with comments from chief economist starting in sixth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
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The International Monetary Fund’s projections suggest the U.S. will experience a solid economic recovery in 2021, in contrast to many other countries.
— Read on www.cnbc.com/2021/04/06/imf-world-economic-outlook-april-2021-global-gdp-to-hit-6percent.html

For the first time in the history of its forecasts, the International Monetary Fund now projects negative growth for all regions of the world.
— Read on ca.finance.yahoo.com/news/imf-projects-economic-contraction-for-all-regions-of-the-world-130000281.html