IMF Raises Global Economic Outlook to 6% in 2021, 4.9% in 2022

The international Fund (IMF) said in its 2021 World Economic Outlook (WEO) forecast that the global economy is projected to grow 6% in 2021 and 4.9% in 2022.

The report added that the prospects for emerging markets and developing economies have declined by 2021, especially for emerging Asian economies. On the other hand, forecasts for advanced economies were revised upwards.

It noted that the 0.5% upgrade for 2022 derives largely from the expected upgrade of advanced economies, particularly the United States, reflecting the expected legislation for additional financial stimulus in the Q2 of 2021 and improved health services.

"Access to a vaccine has emerged as the main fault line for the global recovery, however, recovery is not guaranteed even in countries where infections are currently very low as long as the virus is spreading elsewhere," the IMF said in the forecast.

"Slower-than-anticipated vaccine rollout would allow the virus to mutate further. The immediate priority is to deploy vaccines equitably worldwide."

“Inflation is expected to return to pre-pandemic levels in most countries in 2022 once these disruptions work their way through prices, although uncertainty remains high.”

“Central banks in general should consider transient inflation pressures and avoid tightening until there is more clarity on the underlying price dynamics, however, there is a risk that transient pressures may become more persistent and central banks may need to take precautionary measures.”

The double whammy of emerging market and developing economies from the deteriorating pandemic dynamics and tighter external financial conditions would severely hamper their recovery and push global growth below the baseline of these expectations.

A $50 billion IMF staff proposal, jointly endorsed by the World Health Organization (WHO), World Trade Organization (WTO), and World Bank, provides clear targets and pragmatic actions at a feasible cost to end the pandemic, as weak economies also need unimpeded access to international liquidity.

The International Monetary Fund's $50 billion staff proposal, jointly approved by the World Health Organization (WHO), the World Trade Organization (WTO) and the World Bank, offers clear goals and practical, cost-effective measures to stem the pandemic, as vulnerable economies also need to access international liquidity.

The IMF's proposed general allocation of $650 billion in Special Drawing Rights (SDRs) aims to strengthen the reserve assets of all economies and help ease liquidity constraints.

"These multilateral actions can be reinforced by national level policies tailored to the crisis phase that help catalyze a sustainable and inclusive recovery."