Thu | Sep 23, 2021

IMF: Vaccines will power 5.5% global economic growth in 2021

Published:Wednesday | January 27, 2021 | 4:18 AM
In this January 15, 2021 photo, Dr Yomaris Pena, Internal Medicine Physician with Somos Community Care, extracts the last bit of Pfizer-BioNTech COVID-19 vaccine out of a vial so as not to waste it.
In this January 15, 2021 photo, Dr Yomaris Pena, Internal Medicine Physician with Somos Community Care, extracts the last bit of Pfizer-BioNTech COVID-19 vaccine out of a vial so as not to waste it.

The spread of COVID-19 vaccines will power a stronger global economic recovery in 2021, the International Monetary Fund, IMF, forecast Tuesday.

After sinking 3.5 per cent in 2020, the worst year since World War II, the global economy will grow 5.5 per cent this year, the 190-country lending organisation predicted. The new figure for 2021 is an upgrade from the 5.2 per cent expansion the IMF forecast in October and would mark the fastest year of global growth since the 2010 snapback from the financial crisis.

The vaccines should contain the spread of the virus and allow governments around the world to ease lockdowns and encourage a return to normal economic activity. The world economy also got a boost from government stimulus programmes late last year in the United States and Japan.

But the IMF also says economies worldwide will need support from their governments to offset the damage from the pandemic and warns that coronavirus mutations could cloud the outlook for global health and economic growth.

“Much depends on the outcome of this race between a mutating virus and vaccines and the ability of policies to provide effective support until the pandemic ends,” IMF chief economist Gita Gopinath said at a press briefing Tuesday. “There remains tremendous uncertainty.’’

In an update to its World Economic Outlook, the IMF said that it expects the United States economy – the world’s biggest – to expand 5.1 per cent this year after collapsing 3.4 per cent in 2020. China, the No. 2 economy, is expected to record 8.1 per cent growth after eking out a 2.3 per cent increase in 2020.

The 19 countries European countries that share the euro currency will collectively register 4.2 per cent growth this year after seeing economic output crater 7.2 per cent in 2020, the IMF says. The Japanese economy is forecast to grow 3.1 per cent, reversing a 5.1 per cent decline in 2020.

The IMF gave India a big upgrade, thanks to a faster-than-expected recovery at its factories and farms: The Indian economy is forecast to expand 11.5 per cent in 2021, fastest among major economies, and a turnaround from 2020’s decline of 8 per cent.

The agency also expects global trade to rebound this year: recording 8.1 per cent growth after falling 9.6 per cent last year.

AP