The International Monetary Fund said on Tuesday the world economy could recover faster than expected in 2021, revising its January projection up by 0.5 per cent points to 6 per cent.
The United States and China, the world’s two biggest economies, are likely to grow by 6.4 per cent and 8.4 per cent, respectively, in 2021, driving the global rebound if pandemic-related economic curbs can be rolled back, the IMF said in a report published on Tuesday.
But while “a way out of this health and economic crisis is increasingly visible,” according to the IMF’s Gita Gopinath, “divergent recovery paths” will likely result in increased poverty in so-called emerging markets and low-income countries, which could struggle to recover.
Gopimath, the fund’s economic counsellor, estimated that while per-capita gross domestic product (GDP) in wealthier countries could fall by over 2 per cent by 2024, relative to pre-pandemic forecasts, the decline could top 5 per cent in poorer counterparts.
The IMF said the pandemic and related restrictions meant 95 million people could “have entered the ranks of the extreme poor in 2020,” after global GDP shrank by an estimated 3.3 per cent and left what the United Nations Conference on Trade and Development in March described as a 10 trillion dollar hole in the global economy.
The contraction would have been greater without a late year revival of merchandise trade, which the fund said had returned to pre-pandemic levels.
However, services trade “remains subdued,” the IMF said, with international travel at a near standstill since March 2020, causing particularly large losses in tourism-dependent countries.