A day after the International Monetary Fund (IMF) forecast a global growth of six per cent for this year, IMF Managing Director Christine Georgieva has said that after the worst global recession since the Second World War, the recovery is underway.
In its latest World Economic Outlook, IMF has projected a stronger recovery for the global economy compared with its January forecast, with growth projected to be 6 percent in 2021 (0.5 percentage point upgrade) and 4.4 percent in 2022 (0.2 percentage point upgrade), after an estimated historic contraction of -3.3 percent in 2020.
The outlook, she asserted, is brighter because millions of people are benefitting from vaccinations and because of further policy support, especially in the US. Georgieva said this is adding to the exceptional and coordinated actions taken over the past year.
“Without them, without those fiscal and monetary measures, the global contraction last year would have been three times worse. This could have been another Great Depression,” she said at the start of the annual Spring Meeting of the IMF and the World Bank.
Yet, while there is light, the crisis continues to cast a dark shadow. Economic fortunes are diverging dangerously. A small number of advanced and emerging market economies, led by the US and China, are powering ahead. Weaker and poorer countries are falling behind in this multi speed recovery, she rued.
“We also face extremely high uncertainty, especially over the impact of new virus strains and potential shifts in financial conditions. And, there is the risk of further economic scarring from job losses, learning losses, bankruptcies, extreme poverty, hunger,” the IMF MD said.
The Global Policy Agenda released by the IMF, she said, focusses on three things: a fair shot at the vaccine, a fair shot at recovery and a fair shot at the future.
“This is perhaps the most consequential decision that any government can make this year. The focus should be on scaling up public investment in green projects and digital infrastructure, in people’s health and education, to ensure that everyone can benefit from the historic transformation to greener, smarter, more inclusive economies,” she argued.