The Strategist

IMF improves global GDP growth forecast

04/07/2021 - 04:42

The global economy will grow at a slightly higher rate than previously expected over the next two years, the International Monetary Fund (IMF) believes. Its global growth forecast for 2021 was raised from 5.5% to 6%, for 2022 from 4.2% to 4.4%. Among developed countries, the US economy will be the fastest to recover, while among developing countries China and India will show the best performance.

Jorge Franganillo
Jorge Franganillo
The International Monetary Fund raised its forecast for global economic growth this year from 5.5% to 6% and from 4.2% to 4.4% in 2022. The 2020 recession estimate is improved from minus 3.5% to minus 3.3%. The new IMF forecast assumes faster growth than that recorded in 2010 (5,4%) while recovering from the global financial crisis (then the global recession was only 0,1%). 

"Vaccination and adaptation to the pandemic allow the economy to recover faster than expected, an additional incentive is the anti-crisis programmes in the USA," the fund's report says. Its experts expect the growth rate to slow to 3.3% per year in the medium term.

Without stimulus measures the recession in the world would have been three times deeper, the IMF assessed.

Among developed countries, the highest growth rate this year is expected in the US - 6.4%. This will surpass the pre-crisis level of GDP, while in most countries it will happen only in 2022. Next year growth will slow to 3.5%. This estimate does not take into account the possible consequences for the US economy of President Joe Biden's infrastructure plan, which, remember, proposed to invest more than $2 trillion in upgrading roads, ports and other infrastructure, while raising corporate income tax from 21% to 28%.

The IMF forecasts 4.4% GDP growth for the euro zone this year and 3.8% next year (expectations improved by 0.2 percentage point for both years). Among developing countries, the highest growth rates will be in China and India at 8.4% and 12.5% respectively (5.6% and 6.9% in 2021). Brazil will grow at 3.7% this year and 2.6% - next year, Mexico - at 5% and 3% and Saudi Arabia - at 2.9% and 4%. The forecast for a barrel of oil has also been improved to $58.52 in 2021 and $54.83 in 2022 (in January the fund expected $50 and $48.8 per barrel).