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IMF raises world economic growth forecast, says way out of crisis ‘increasingly visible’

The International Monetary Fund (IMF) said on Tuesday it expects the global economy to grow by 6% in 2021, up from its 5.5% forecast in January. The stronger economic recovery was projected due to coronavirus vaccine rollouts.

“Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible,” Gita Gopinath, the IMF’s chief economist, said in the latest World Economic Outlook report.

The global GDP (gross domestic product) for 2022 is seen increasing by 4.4%, higher than an earlier estimate of 4.2%. This follows an “estimated contraction of -3.3% in 2020.”

However, Gopinath warned that recoveries are not equal across countries, saying, “Nonetheless, the outlook presents daunting challenges related to divergences in the speed of recovery both across and within countries and the potential for persistent economic damage from the crisis.”

The agency estimated a 5.1% GDP rate for advanced economies this year, “with the United States expected to surpass its pre-Covid GDP level this year, while many others in the group will return to their pre-Covid levels only in 2022.”

Similarly, among emerging-market and developing economies, China had already returned to its pre-Covid GDP in 2020, whereas many others are not expected to do so until well into 2023, said the report. The forecast for emerging and developing economies is 6.7% in 2021, with India expected to grow as much as 12.5%.

The IMF said: “Thanks to unprecedented policy response, the Covid-19 recession is likely to leave smaller scars than the 2008 global financial crisis. However, emerging market economies and low-income developing countries have been hit harder and are expected to suffer more significant medium-term losses.”

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