IMF projects stronger global growth in 2021 with rising vaccinations

Published April 7, 2021, 3:00 PM

by Agence-France-Presse

 WASHINGTON (AFP) – Accelerated vaccinations and a flood  of government spending, especially in the United States, have boosted the  outlook for the global economy, but more must be done to prevent permanent  scars, the IMF said on Tuesday.

   The International Monetary Fund’s World Economic Outlook now sees global  growth of 6.0 percent this year after the contraction of 3.3 percent in 2020  caused by the Covid-19 pandemic — the worst peacetime downturn since the Great  Depression a century before.

   Rapid government responses, including $16 trillion in public funds,  prevented a much worse outcome, a collapse that could have been “at least three  times as large,” IMF chief economist Gita Gopinath said.

(FILES) In this file photo Gita Gopinath, the Chief Economist of the International Monetary Fund, speaks with AFP outside of their headquarters in Washington, DC on October 13, 2020. (AFP)

   The United States, which deployed another $1.9 trillion last month, is  expected to grow by 6.4 percent, among the fastest expansions in the world and  1.3 points higher than the January forecast.

   Meanwhile, China’s economy, one of few that grew last year, will expand 8.4  percent in 2021, the IMF said.

   The Euro Area too will see GDP expand 4.4 percent, slightly better than the  prior forecast.

   Gopinath said “even with high uncertainty about the path of the pandemic, a  way out of this health

and economic crisis is increasingly visible.”

   However, she stressed that the health crisis remains the critical factor in  the economic recovery, and the slow rollout of vaccinations in many developing  countries risks not just a worsening Covid-19 outbreak, but also a more  troubling future for those nations.

   “The outlook presents daunting challenges… and the potential for  persistent economic damage from the crisis,” she said in the forward to the  report, again warning against withdrawing support too soon.

   “Without additional efforts to give all people a fair shot, cross-country  gaps in living standards could widen significantly, and decades-long trends of  global poverty reduction could reverse,” Gopinath said.

   She told reporters that governments must be mindful of rising debt and  deficits, and use a “tailored approach which is specific to where they are in  terms of the speed of their recovery.”

   And because the pandemic “has gone on for much longer than one might have  expected” governments should target their scarce resources.

   In order to capture more revenues for their coffers, the IMF is “very much  in favor of a global minimum corporate tax,” Gopinath said.

   A day after US Treasury Secretary Janet Yellen called on G20 countries to  adopt a minimum tax, Gopinath noted the “large amount” of tax avoidance with  “countries sending money to tax havens.”    “That’s reducing the tax base on which governments can collect revenues and  do the necessary social and economic spending that’s required,” she said. “It  is a big concern of ours.”

 
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