The world economy is expected to surge and expand 6% in 2021 despite previous gloomier projections, according to an International Monetary Fund report.
The International Monetary Fund (IMF) projected that the world’s total gross domestic product (GDP) will grow 6% in its April 2021 World Economic Outlook report released Tuesday. The IMF previously expected the world economy to rebound from the economic recession caused by the coronavirus pandemic with 5.5% growth.
“Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible,” IMF Chief Economist Gita Gopinath said in a blog post Tuesday. “Thanks to the ingenuity of the scientific community hundreds of millions of people are being vaccinated and this is expected to power recoveries in many countries later this year.”
Gopinath added that nations have successfully adapted to remote working models as a result of less mobility, which was a factor in better economic projections.
The rosy projection was fueled by positive vaccination efforts and economic stimulus in many countries, the report said. Increasing rates of vaccination could further boost growth forecasts, but new coronavirus variants could damper projections.
The IMF, though, warned of an uneven recovery where wealthy nations surge forward and leave poorer nations, which have less-advanced vaccination capabilities, behind, according to the report. The IMF projected India and China would expand 12.5% and 8.4% respectively, while the U.S. would grow 6.4%.
The 2020 economic recession is expected to have a smaller overall impact on the world than the 2008 Great Recession, but will still leave the biggest scars on low-income and emerging market economies, according to the IMF.
“Strong international cooperation is vital for … ensuring that emerging market economies and low-income developing countries continue to narrow the gap between their living standards and those of high-income countries,” the report said. “On the health care front, this means ensuring adequate worldwide vaccine production and universal distribution at affordable prices.”
The IMF projected the world economy to grow 4.4% in 2022, according to Tuesday’s report. The global economy dipped 3.3% in 2020.