IMF outlook projects better recovery for 2021, positive growth for 2022

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Jan. 26 (UPI) — In an updated forecast on Tuesday, the International Monetary Fund expressed greater — but cautious — optimism for global economic recovery over the next two years.

According to the updated forecast, the global economy is expected to grow 5.5% over 2021 — a slight increase (0.3%) over its previous outlook in October.

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For 2022, the IMF expects global growth of 4.2%.

The IMF said the more optimistic figures are based on “expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies.”

“The projected growth recovery this year follows a severe collapse in 2020 that has had acute adverse impacts on women, youth, the poor, the informally employed and those who work in contact-intensive sectors,” the group said in a statement.

“The strength of the recovery is projected to vary significantly across countries.”

The IMF projects that the United States will see economic growth of 5.1% in 2021, based on new federal relief measures — like President Joe Biden‘s proposed $1.9 trillion rescue package.

U.S. growth is predicted to decline to 2.5% in 2022.

According to the forecast, India leads in expected 2021 growth (11.5%), followed by China (8.1%). Those economies are projected to grow 6.8% and 5.6% next year, respectively.

Gita Gopinath, IMF chief economist and director of research, said the more upbeat outlook reflects “positive effects of the vaccine success” at the end of 2020.

The figures also take into account resurgences of the virus in some economies.

Earlier this month, India rolled out an ambitious vaccination plan to distribute nearly 300 million doses.

“We are in a race between a mutating virus and vaccinations. And a lot depends on the outcome of this race,” Gopinath said in a statement. “So, if we have better news on vaccinations, faster rollout, then things could improve much better.

“If things go bad and financial conditions worsen, that will have a big knock-on effect because we are living at the time with very high levels of death in the world.”