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WASHINGTON – The International Monetary Fund (IMF) on Tuesday raised its forecast for world economic growth in 2021 and said last year’s coronavirus recession, the largest peacetime contraction since the Great Depression, would be nearly a percentage point. less severe than expected. .
The global lender said multiple vaccine approvals and the launch of vaccines in some countries had raised hopes for an eventual end to the pandemic that has now infected nearly 100 million people and claimed more than 2 lives. 1 million worldwide.
But he warned that the world economy continues to face “exceptional uncertainty” and that new waves of infections and variants of the coronavirus disease 2019 (COVID-19) pose risks, and global activity will remain well below previous projections. to COVID-19 carried out a year ago.
IMF chief economist Gita Gopinath said US President Joseph R. Biden, Jr.’s promise to fund the World Health Organization’s COVAX vaccine initiative marked “a big step” in containing the pandemic and ensure a more equitable distribution of vaccines.
“Much more will be needed, because as we can see, given the mutant virus, this is not a problem that will go away soon,” Gopinath told a news conference.
“There is still a huge amount of uncertainty,” he told Reuters in a separate interview. “We know that the health crisis does not end until it ends everywhere.”
Ms Gopinath said the world economy could earn $ 9 trillion between 2020 and 2025 if faster progress could be made to end the health crisis, and clearly advanced economies have a stake in helping the poorest countries to recuperate.
“There is complete economic sense to do this, and to do it right now,” he told Reuters.
The IMF estimates that nearly 90 million people are likely to fall below the extreme poverty line during 2020-2021, and that the pandemic will wipe out $ 22 trillion in projected production through 2025 and reverse the progress made in reducing poverty. poverty during the last two decades.
Ms Gopinath said that advanced economies were recovering faster and urged countries with means to continue to offer aid to poorer nations, low-interest loans and debt relief.
“There is still much, much to do, but we are certainly at least in positive growth territory this year, compared to last year,” he said at the press conference.
ADHESIVE WITH VACCINE
In its latest World Economic Outlook, the IMF forecast a global contraction of 3.5% in 2020, an improvement of 0.9 percentage points from the 4.4% fall forecast in October, given a stronger-than-expected boost. expected in the second half of last year.
He predicted global growth of 5.5% in 2021, 0.3 percentage points better than in October, citing expectations for a vaccine-driven rally later in the year and additional political support in the United States, Japan and some. other large economies.
He said the US economy, the world’s largest, was expected to grow by 5.1% in 2021, an upward revision of 2 percentage points attributed to the drag from strong momentum in the second half of 2020 and to the cumulative benefit of about $ 900 billion in additional fiscal support approved in December.
The outlook would likely improve further if the US Congress passes a $ 1.9 trillion aid package proposed by Biden, Gopinath said, forecasting a 5% increase in three years if the package is approved by the US Congress. United.
China’s economy is expected to expand by 8.1% in 2021 and 5.6% in 2022, compared to October’s forecast of 8.2% and 5.8%, respectively, while China’s economy India will grow 11.5% in 2021, 2.7 percentage points more than the forecast in October. , after a stronger than expected recovery in 2020.
The Fund said countries should continue to support their economies until activity returns to normal to limit the lingering damage from last year’s deep recession.
Low-income countries would need continued support through grants, low-interest loans and debt relief, and some countries may require debt restructuring, the IMF said. – Andrea Shalal / Reuters
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