Optimism that the new vaccines will put an end to the epidemic and allow the resumption of economic activity, in addition to stimulus programs in large economies, strengthens expectations for growth this year, reaching 5.5%, according to the International Monetary Fund.
However, this Washington-based financial institution, which lends during crises, has warned that the future is witnessing an “exceptional uncertainty”, and that governments should continue to work to prevent permanent damage after the “Covid-19” pandemic caused the worst economic crisis in peacetime. Since the “Great Depression”.
The new growth figures after a decline of 3.5% worldwide in 2020 reflect “expectations of boosting activity by relying on the availability of vaccines later this year, and additional support for measures in some large economies,” including the United States and Japan, according to the latest IMF report on global economic prospects. .
These developments lead to “a stronger starting point for the 2021-2022 projections globally, compared to previous projections.”
However, “much remains to be done in terms of health and economic policies to limit the damage caused by the sharp downturn in 2020 and ensure a sustainable recovery,” according to the IMF.
The report noted that the increasing number of HIV infections in some countries, including new mutated copies, which led to re-imposition of lockdown measures, in addition to logistical problems related to the distribution of the vaccine, stands in “important contrast to good news.”
Even with growth recorded, many economies will not return this year to pre-epidemic levels, according to the IMF.
The IMF urged governments to continue providing support until the “recovery goes well.”
In the United States, which approved a massive stimulus package until the end of December, the Fund expects growth to be two percentage points higher than its previous forecast of 5.5%, its strongest rate since 1984.
New President Joe Biden is seeking to endorse a massive $ 1.9 trillion bailout that would provide support to families, businesses, and battered local and federal governments.
Japan also benefits from a rescue plan approved in December, and the IMF raised its forecast for 2021 growth by eight-tenths at a rate of 3.1%.
And those incentive measures also provide “favorable repercussions for business partners,” according to the report.
The IMF expected that China’s economy will grow by 8.8%, slightly less than October’s expectations, while India will grow by 11.5%, which is two and seven-tenths more than the previous forecast.
Setbacks in the way of recovery
But in Europe, where governments imposed new lockdown measures, leading to a curfew, amid an increase in infections, in addition to the spread of a new, more contagious mutated version of the virus, the Fund lowered its growth forecast.
Growth estimates for the euro area were lowered by a full percentage point at 4.2%, with significant declines for Germany, France, Spain and Italy.
While the IMF indicated that the agreement concluded by London at the last minute regarding its exit from the European Union prevented major risks to the economic outlook, the Fund lowered its expectations for Britain as well.