The International Monetary Fund on Tuesday raised its forecast for global economic growth in 2021 and said the coronavirus-triggered downturn in 2020 would be almost a full percentage point less severe than expected.
It said multiple vaccine approvals and the unveiling of vaccinations in some countries in December had boosted hopes of an eventual end to the pandemic.
But it warned that the world economy continued to face ‘exceptional uncertainty’ and global activity would remain well below pre-COVID projections made one year ago. Close to 90 million people are likely to fall below the extreme poverty threshold during 2020-2021, with the pandemic wiping out progress made in reducing poverty over the past two decades.
The IMF forecast a 2020 global contraction of 3.5%, an improvement of 0.9 percentage points from the 4.4% slump predicted in October, reflecting stronger-than-expected momentum in the second half. It predicted global growth of 5.5% in 2021, an increase of 0.3 percentage points from earlier, citing expectations of a vaccine-powered uptick later in the year and added policy support in the U.S., Japan and other large economies.
The U.S. economy was expected to grow 5.1% in 2021, an upward revision of 2 percentage points attributed to carry over from strong momentum in the second half.
China is expected to expand 8.1% in 2021 and 5.6% in 2022, compared with its October forecasts of 8.2% and 5.8%, respectively, while India’s economy is seen growing 11.5% in 2021, up 2.7 percentage points after a stronger-than-expected recovery in 2020.