The rollout of COVID-19 vaccines and vast sums of government aid will accelerate global economic growth to a record high this year in a powerful rebound from the pandemic recession, the International Monetary Fund says in its latest forecast.
The 190-country lending agency on Tuesday (Wednesday AEST) said it expected the world economy to expand 6 per cent in 2021, up from the 5.5 per cent it had forecast in January.
“A way out of this health and economic crisis is increasingly visible,” IMF chief economist Gita Gopinath told reporters.
The agency’s economists now estimate the global economy shrank 3.3 per cent in 2020 after the devastating recession that followed the coronavirus’ eruption across the world early last spring.
That is the worst annual figure in the IMF’s database, though not as severe as the 3.5 per cent drop it had estimated three months ago.
Without US$16 trillion ($20.92 trillion) in global government aid that helped sustain companies and consumers during COVID-19 lockdowns, IMF forecasters said last year’s downturn could have been three times worse.
Australia’s economy is no exception, set to expand 4.5 per cent in 2021 before a significant slowdown to 2.8 per cent in 2022.
Those figures, based on a combination of Australian government forecasts and IMF analysis, would come on the back of a 2.4 per cent slump last year.
The US economy, the world’s largest, is now forecast to expand 6.4 per cent in 2021 — its fastest growth since 1984 — and 3.5 per cent in 2022.
Professor Gopinath warned the economic recovery was likely to be uneven.
The rebound is expected to be slower in poor countries that can’t afford massive government stimulus and in those dependent on tourism.
Economic damage from the health crisis is “reversing gains in poverty reduction” and last year increased the ranks of extreme poor by 95 million compared with pre-pandemic projections.
Because of trends accelerated by the pandemic, such as stepped-up automation and a shift toward e-commerce and away from brick-and-mortar stores, the economist predicted “many of the jobs lost are unlikely to return”.
A faster recovery in the United States means US interest rates could rise “in unexpected ways,” rattling financial markets and pulling investment out of hard-hit, debt-ridden emerging markets.
In the IMF’s estimation, the global rebound will gradually lose momentum and return to pre-COVID levels of just above 3 per cent growth.
Countries will again encounter the obstacles they faced before the pandemic, including ageing work forces in most rich countries and in China.
The world’s second-largest economy, China, which imposed a draconian COVID-19 clampdown a year ago and got a head start on an economic recovery, will record 8.4 per cent growth this year and 5.6 per cent in 2022, the IMF estimates.
The monetary fund expects the 19 countries that share the euro currency to collectively expand 4.4 per cent this year and 3.8 per cent in 2022. Japan is expected to register 3.3 per cent growth this year and 2.5 per cent the next.