IMF sees record global economic growth in 2021

The International Monetary Fund (IMF) projects that COVID-19 vaccines and fiscal stimulus will push the global economy to a record growth level of 6 percent in 2021, led by an outsized recovery in the United States.

“The upgrades in global growth for 2021 and 2022 are mainly due to upgrades for advanced economies, particularly to a sizeable upgrade for the United States (1.3 percentage points) that is expected to grow at 6.4 percent this year,” the IMF’s research director, Gita Gopinath, wrote in a blog post on the latest World Economic Outlook report, released Tuesday.

“This makes the United States the only large economy projected to surpass the level of GDP it was forecast to have in 2022 in the absence of this pandemic,” she added.

China’s economy, she noted, returned to its pre-pandemic level in 2020, and is on track to grow at 8.4 percent, and India is on track for 12.5 percent growth. Many other economies, however, are not expected to fully recover until 2023.

The recovery follows a 3.3 percent global contraction in 2020, which is 1.1 points smaller than the IMF anticipated in its last report.

The new report credits strong fiscal responses to the pandemic for averting a potentially worse economic crisis.

“Thanks to unprecedented policy response, the COVID-19 recession is likely to leave smaller scars than the 2008 global financial crisis,” it said.

The expected global growth for 2021 is up 0.8 points from the last projection.

But growth will not be even.

“Emerging market economies and low-income developing countries have been hit harder and are expected to suffer more significant medium-term losses,” the IMF found.

In 2022, global growth is expected to drop to 4.4 percent, and moderate to 3.3 percent in the medium term.

For the 95 million people who fell into extreme poverty last year, the recovery from a year of lockdowns and learning loss may not be so swift. The world’s economic future, the report said, will depend on how quickly the health crisis comes under control.