A beacon on the horizon: the International Monetary Fund has become more upbeat about the global economy, as coronavirus vaccinations are being administered across the world. The world body is, however, worried about the risk new COVID variants pose to the post-pandemic recovery.
According to its latest World Economic Outlook, published Tuesday, the institution now expects the global economy to grow 5.5% this year — a 0.3 percentage point increase from October’s forecasts. It sees global GDP (gross domestic product) expanding by 4.2% in 2022.
"Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens," IMF’Chief Economist Gita Gopinath said in a blog post.
Countries throughout the world has seen surging numbers of COVID-19 infections and deaths over the past few months, as new variants of the coronavirus have spread rapidly. These have been described as more infectious and are potentially deadlier than the original strain.
As a result, many countries have stepped up their social restrictions, further inflicting economic pain.
In fact, the IMF cut its Gross Domestic Product forecasts for the euro zone this year by one percentage point. The 19-member region, which has been severely hit by the pandemic, is now expected to grow by 4.2% this year.
Germany, France, Italy and Spain — the four largest economies in the euro zone — have also seen their growth expectations cut for 2021.
On the other hand, the IMF says the United States is set to grow more than expected this year.
The Fund revised its GDP forecast upward by two percentage points on the back of a strong momentum in the second part of 2020 and additional fiscal support. GDP is now seen at 5.1% this year.
