Covid vaccination and strong fiscal support, especially in the United States, improved forecasts for the world economy after the historic recession caused by the pandemic, but much remains to be done to avoid permanent scars, the IMF estimated on Tuesday.
In its latest semi-annual “World Economic Outlook” (WEO) report, the International Monetary Fund revised up its forecasts for world Gross Domestic Product (GDP).
It now projects a GDP increase of 6% this year (+0.5 points compared to the last projection in January) and 4.4% next year (+0.2 points).
In addition, as a sign of the expected rebound, it predicts that the volume of trade in goods and services in the world will recover by 8.4% in 2021 and 6.5% in 2022.
“Even with high uncertainty about the course of the pandemic, a way out of this health and economic crisis is increasingly visible,” IMF chief economist Gita Gopinath said in the foreword to the WEO.
In 2020, the 3.3% contraction caused by the health emergency generated the worst peacetime recession since the Great Depression.
Quick government responses prevented a much worse outcome, a collapse that could have been “at least three times greater,” Gopinath noted.
For the United States, which approved a new stimulus package of 1.9 trillion dollars last month, the growth projections for 2021 and 2022 are at 6.4% (+1.3 points) and 3.5% respectively. (+1 point).
The world’s largest economy is strengthened thanks to the advance of vaccination – with more than 3 million injected doses per day – which has eased restrictions in hit sectors, such as restaurants and tourism.
Meanwhile, China’s economy, one of the few that grew last year, will expand 8.4% in 2021, according to the IMF.
– Uneven recovery –
While the United States is expected to exceed its pre-pandemic GDP level this year, after China did so last year, many others will not reach that threshold until 2022 or well into 2023 for developing nations.
Even among developed countries, in the euro zone, where the vaccination campaign is delayed, the IMF expects growth to reach 4.4% this year, insufficient pace to erase the 6.6% contraction recorded last year. .
And the Latin American and Caribbean region will grow just 4.6% after a 7% contraction in 2020.
The IMF warned that the health crisis remains the crucial factor in economic recovery, noting that slow vaccination in many developing nations increases the risk of a worsening of the covid-19 outbreak, and of a widening gap with countries. rich.
Business closures to slow the spread of the virus caused damage to the economies of developing countries that drastically reduced per capita income and “reversed progress in reducing poverty,” he said.
The IMF estimates that about 95 million people fell into extreme poverty in 2020, and that 80 million more are undernourished than before.
– “High degree of uncertainty” –
Gopinath said solving the health crisis around the world will require coordination to reverse “deeply iniquitous” access to the vaccine, where rich countries are getting most of the supply.
“Nations will need to work together … to ensure universal access, including by funding the Covax mechanism that many low-income countries rely heavily on for doses,” he said.
The IMF acknowledged that its global projections carry a “high degree of uncertainty” and that they could improve if vaccination were accelerated worldwide, or worse if the pandemic were prolonged due to the appearance of variants of the new coronavirus.
The multilateral organization recommended that its member countries maintain the course of monetary policy and continue supporting their economies, but with “more focused” stimulus plans.
“While all eyes are on the pandemic, it is essential to move forward in resolving trade and technological tensions,” Gopinath also noted.
The IMF urged countries to cooperate to cushion the cost of climate change, modernize international corporate taxes, and fight tax evasion.
In addition, he affirmed that in the future countries will also have to catch up with the requalification of millions of workers whose jobs will have disappeared forever with this crisis.