The economic prognosis for the world’s rich countries has been raised by The International Monetary Fund particularly the United States, this year, citing COVID-19 vaccines as a key factor in sustaining strong recovery from the pandemic slump. However, the 190-country financing agency has lowered its projection for poorer nations, the majority of which are having difficulty vaccinating their citizens.
Overall, the IMF forecasted that the world economy will grow by 6% this year, up from 3.2 percent in the epidemic year of 2020.
The IMF’s prediction, which is consistent with its April forecast, would result in the highest calendar-year global growth since 1980.
However, behind the global figure, a chasm is developing between vaccination haves and have-nots. The International Monetary Fund (IMF) forecasts advanced countries to expand 5.6 percent this year, up from 5.1 percent in April, owing to the rapid rebound of consumers and companies. However, it cut its 2021 projection for emerging markets and developing nations from 6.7 percent to 6.3 percent, down from 6.7 percent in April.
A lot is needed to be done for the poor nations in order to somehow equal with the wealthier nations, and enough supplies of vaccines could be provided to them, says Gita Gopinath, the IMF’s chief economist.
“The recovery is not assured until the pandemic is beaten back globally,” Gopinath said. She requested that affluent nations fulfill their promises to provide 1 billion doses of the vaccine to underdeveloped countries as soon as possible.
“Concerted, well-directed policy actions … can make the difference between a future where all economies experience durable recoveries or one where divergence is intensified, the poor get poorer and social unrest and geopolitical tensions grow.,” she said.
Following last year’s COVID-19 lockdowns, advanced economies with close to 40% of the population vaccinated are mostly reopening. However, just 11% of people in developing and emerging market nations get vaccinated. Furthermore, poorer nations’ governments are unable to match the massive amounts of government spending that affluent countries have used to jumpstart their economies.
The US economy is anticipated to expand by 7% this year, up from a 3.5 percent decline last year and an improvement from the IMF’s April projection of 6.4 percent growth for 2021.
The 19 European countries that use the euro currency are expected to expand by 4.6 percent this year, compared to a 6.5 percent contraction last year. Japan’s economy is predicted to increase by 2.8 percent this year, after contracting by 4.7 percent in 2020.
However, the IMF’s projection for Japan for 2021 is lower than what it predicted in April, owing to a recurrence of COVID-19 cases later this year.
China, the world’s second-largest economy behind the United States, had its growth forecast lowered to 8.1 percent in the developing world after the government cut expenditure and investment. After India was hit by COVID cases, the IMF lowered its GDP projection for the country to 9.5 percent from 12.5 percent three months ago.
The IMF voiced worry in its latest World Economic Outlook report that any significant rise in inflation would force central banks throughout the world to raise interest rates, jeopardizing the global recovery. Nonetheless, it anticipates inflation would be seen next in most of the countries.