Global economy to grow 5.5 per cent in 2021 after 3.5 per cent contraction in 2020, IMF forecasts
- China’s economy seen growing 8.1 per cent in 2021 as recovery continues, while the US could rebound to 4.3 per cent growth, according to the International Monetary Fund (IMF)
- IMF praises US, European Union and Japan economic stimulus measures but warns that recovery is contingent on control of the coronavirus
The world economy will grow by 5.5 per cent this year, reversing the 3.5 per cent contraction that it saw in 2020, the International Monetary Fund (IMF) projects in its latest global economic forecast.
Growth will also be boosted by the continued strong economic rebound in China, as well as by policy support in large economies such as the United States and Japan. In addition, the roll-out of coronavirus vaccines could boost economic activity in the second half of the year.
The 2021 growth forecast was revised up 0.3 percentage points from its previous forecast in October, while last year’s economic contraction was 0.9 percentage points less than previously projected, according to the World Economic Outlook update, published on Tuesday.
However, economic activity remains well below pre-pandemic levels. “Even with the anticipated recovery in 2021-22, output gaps are not expected to close until after 2022,” the IMF report says.
In terms of securing that recovery path, its likely important [for China] to ensure that the rebalancing towards private consumption continues and perhaps even accelerates to an extent
China, the world’s second-largest economy, is expected to maintain its “strong recovery”, with growth seen hitting 8.1 per cent this year following its “effective containment measures, a forceful public investment response, and central bank liquidity support”, the IMF said. The new forecast is 0.1 percentage point lower than it was in the October forecast.