IMF Estimates Stronger But Unevenly Distributed Global Economic Growth
The global economy is likely to pick up faster next year than previously forecast. But the prospects have significantly improved in rich countries. However, the picture is bleaker for many developing countries than a few months ago, the International Monetary Fund (IMF) says in its new estimates.
The organization from Washington now assumes 4.9 percent growth in 2022. The IMF previously forecast a plus of 4.4 percent. For this year, the forecast remains that the world economy will grow by 6 percent.
For the United States and the eurozone, for example, the prognosis has turned rosier. As previously announced, the IMF is even counting on 7 percent growth for the US economy this year, the strongest progress since 1984.
But in a country like India, growth is now expected to be 3 percentage points lower than the experts thought possible in April. The economic picture also looks less favourable for Indonesia, Malaysia, the Philippines, Thailand and Vietnam and several African countries that the fund has not named.
According to IMF chief economist Gita Gopinath, the adjustments reflect differences in vaccination coverage. Nearly 40 percent of developed economies are already fully vaccinated, compared to 11 percent in emerging markets and only a fraction of people in developing countries. Poorer countries are therefore much less resilient to the Delta variant of the coronavirus that has been spreading rapidly lately.
Another factor is that extensive support has been set up in more affluent countries to guide companies through the crisis. Substantial investments are also being made there to recover from the crisis, such as President Joe Biden’s large support package in the US. Poorer countries cannot dig so deep into their pockets. In many cases, support measures there were already stopped last year.
Gopinath emphasizes that the recovery in the world is only really guaranteed once the global pandemic has come to an end. Moreover, she warns that new, highly contagious virus variants will continue to pose a risk for the time being. Another threat to the global economy as a whole, she says, is the possibility of a sudden turnaround in central bank policies. For example, if the Federal Reserve were to raise interest rates quickly suddenly, it could be a major setback for emerging markets and developing countries in their recovery.