The International Monetary Fund has revised its growth forecast for the global economy upwards, suggesting a quicker global recovery than initially expected. This comes as the rollout of vaccines has gone into full swing at a much quicker pace than expected and momentous relief packages have been poured in to resuscitate the world’s leading economies.
However, the group also calls for cautious optimism as it warns of “daunting challenges” posed by the uneven distribution of vaccines and growing income inequality across regions of the world.
The upward revision of the growth forecast moves the global GDP pointer for 2021 from 5.5% to 6%, and the knock-over effect is expected to accelerate the global GDP for 2022 from 4.2% to 4.4%.
“Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible,” revealed IMF chief economist Gita Gopinath in the latest World Economic Outlook report.
According to the report, the accelerated global GDP growth is spearheaded by the leading global economies, especially the U.S. It suggests that the U.S is well on track to a robust recovery that’ll see it surpassing pre-pandemic growth rates this year and sending a strong ripple effect across the global economy.
With the latest round of fiscal stimulus and another in the pipelines as well as the rapid rollout of vaccines across the country, the U.S is poised to recover from the pandemic much quicker than most other countries, to lead the global recovery.
“There’s absolutely no reason why we should suffer through a long slow recovery,” the U.S. Treasury Secretary told CNN back in February.
Emerging and developing economies are also expected to experience robust growth averaging 6.7% in 2021, with India expected to grow as fast as 12.5%.
However, the IMF report also raised concerns about growing income inequality and lack of access to vaccines and other healthcare solutions in regions across the income spectrum.
“Within-country income inequality will likely increase because young workers and those with relatively lower skills remain more heavily affected in not only advanced but also emerging markets and developing economies,” Gopinath revealed.
In view of this, the IMF is looking to work with governments to facilitate equitable distribution of fiscal support and access to healthcare systems.
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