IMF’s latest world economic outlook raises global economic growth this year——
China leads the world in economic recovery
The International Monetary Fund (IMF) released the latest issue of world economic outlook on January 26, predicting that the global economic growth in 2021 will be 5.5%, up 0.3 percentage points compared with the forecast in October last year, and that the global economic growth in 2022 will slow down to 4.2%. In the second half of 2021, the global economy will speed up, but the progress of economic recovery in various countries is different and there is obvious differentiation. China’s economic recovery is ahead of the world.
Gita gopinat, chief economist of the IMF, said that the increase in economic growth in 2021 was due to a variety of factors, including the additional policy support of several major economies, and the new crown vaccine is expected to boost the economy in late 2021, which will far offset the drag of the increase in the number of infected people on the recent growth momentum. But Gita gopinat also stressed that “there is a lot of uncertainty in this forecast. Greater success in vaccination and treatment and additional policy support will make the growth rate better than currently expected. On the contrary, if vaccine promotion is slow, virus mutation and national policy support, early withdrawal may worsen the outcome. “
The IMF pointed out that in the forecast period up to the end of 2022, global economic activity will be far weaker than the forecast level of the world economic outlook in January 2020 before the epidemic. The expected recovery momentum of various countries is different, depending on the severity of their health crisis, the impact of domestic economic activities, the size of exposure to cross-border spillover effects and the role of policy support in reducing lasting damage The effectiveness of the system. Gita gopinat stressed that China’s output has returned to its pre epidemic expected level in the fourth quarter of 2020, ahead of all other large economies.
The IMF predicts that the GDP of developed economies will grow by 4.3% in 2021. Among them, the U.S. economy will grow by 5.8%, Japan’s economy will grow by 3.1%, Britain’s economy will grow by 4.5%, the euro area’s economy will grow by 4.2%, and the economies of Germany, France, Italy and Spain in the euro area will grow by 3.5%, 5.5%, 3.0% and 5.9% respectively. The economic output of the United States and Japan will return to the level at the end of 2019 in the second half of 2021.
The GDP of emerging markets and developing economies will grow by 6.3% in 2021. Among them, the five ASEAN countries (Indonesia, Malaysia, Philippines, Thailand and Vietnam) will grow by 5.2%, Russia’s economy by 3.0%, Brazil’s economy by 3.6%, South Africa’s economy by 2.8% and China’s economy by 8.1%. According to the IMF, there are three main reasons why China has achieved such a strong recovery: first, it has achieved remarkable results in epidemic prevention and control; second, it has increased public investment in response to the epidemic; third, the central bank has provided liquidity support.
Novel coronavirus pneumonia causes the new economies to face different income prospects in developed economies and emerging and developing economies (excluding China), which is expected to intensify further, IMF said. As the pace of recovery in developed economies is expected to be generally faster, the progress in income convergence over the past decade is likely to regress. In the past 10 years, more than 50% of the emerging markets and developing economies whose per capita income level has converged to that of developed economies will show a trend of widening per capita income gap from 2020 to 2022.
In order to achieve an inclusive, stable and green economic recovery, the IMF suggests that, first of all, in order to control the epidemic around the world, countries must carry out strong multilateral cooperation. This includes increasing funding novel coronavirus pneumonia vaccine implementation plan to ensure that vaccines can be distributed to all corners of the globe. The top priority for all countries is to ensure that health systems around the world have adequate resources to deal with the epidemic. The international community should also provide assistance to countries with inadequate medical system capacity.
Second, countries must do their best to mitigate the lasting economic damage caused by this crisis. All countries should continue to strengthen public health measures and formulate appropriate economic policies according to the development stage of the epidemic. If local transmission remains high and face-to-face contact must be reduced, safeguards must be maintained, including transfer payments to unemployed workers and sustainable businesses suffering from loss of income. If the local transmission rate is low and economic activities have begun to return to normal, the parameters of safeguard measures can be adjusted to gradually reduce and eventually withdraw from these measures.
Thirdly, before the economic recovery stabilizes, all countries should ensure effective policy support for the economy and financial stability, focusing on improving potential output, ensuring inclusive economic growth with wide participation, and accelerating the transition to a low-carbon economy. Borrowing costs in developed economies remain at a very low level, which can be used to provide necessary financial support on demand to ensure sustained economic recovery. At the same time, given that inflation expectations are well anchored and inflation pressure is weak, developed economies should continue to maintain loose monetary policy until the economy recovers steadily. Emerging market economies should continue to provide financial and monetary policy support for the economy on the premise of no debt persistence risk and stable inflation expectations.
Finally, the international community needs to take more measures to help poor countries cope with the crisis, so that they will not lag far behind in the process of achieving the sustainable development goals. For countries with more severe financing constraints, the international community needs to provide more support in the form of grants, preferential loans and debt relief.
The IMF stressed that in the face of unprecedented global challenges, the international community must act immediately to ensure that all countries in the world can defeat the epidemic, that the trend of economic differentiation among countries and within a country can be reversed, and that the world will move towards a more prosperous, green and inclusive future. (reporter Gao Weidong)