BOFIT Viikkokatsaus / BOFIT Weekly 2021/14
The April edition of the International Monetary Fund’s World Economic Outlook sees the global economy growing by 6 % this year, half of a percentage point higher than its January global growth forecast. The improved outlook was due to broad-based stimulus in many countries and faster than expected rollout of covid vaccination programmes. The IMF projects higher growth across the board, apart from the low-income developing countries. Developed economies are now expected to see GDP growth this year of 5.1 % (0.8 percentage point above the January forecast), while emerging economies will grow at 6.7 % (a 0.4 percentage point increase). The United States saw the largest upward adjustment of its growth figures. With the enactment of major stimulus packages, US growth this year was increased by 1.3 percentage points from January forecast to 6.4 %. The overall pace of global growth will moderate next year to 4.4 %.
The IMF expects the Chinese economy to grow by 8.4 % this year and 5.6 % next year. While 2021 growth got a 0.3 percentage point boost, the outlook for next year remains unchanged from the January forecast. The IMF credits China’s strong recovery to effective measures to suppress the spread of the coronavirus, robust stimulus through public investment and timely liquidity support provided by the central bank.
Russia’s growth forecast for 2021 was also revised up from January by nearly a percentage point to 3.8 %. The same growth pace is now expected to continue through 2022. Some of this improvement reflects the IMF’s assumption that oil prices this year will average 30 % higher than last year. India’s economic growth this year was lifted by a percentage point from the January forecast to 12.5 % as lockdown measures so far have been less severe than expected. The Indian economy is expected to grow by 6.9 % in 2022.
The recovery of emerging economies from the covid crisis depends on many factors and varies considerably across countries. The seriousness of each country’s infection situation and its effect on the healthcare system, the structure of the economy and its dependence on branches heavily impacted by the pandemic (e.g. international tourism), as well as possibilities to apply effective stimulus measures all have an impact on the speed of recovery.
The April edition of the IMF’s World Economic Outlook (WEO) raises regional growth forecasts across the board
Sources: IMF and BOFIT.