IMF Kristalina Georgieva on world development after US financial system and vaccines
International Monetary Fund executive director Kristalina Georgieva speaks at a press conference in Washington DC on March 4, 2020.
Liu Jie | Xinhua | Getty Images
LONDON – The International Monetary Fund is even more optimistic about global growth this year, but has insisted that “high uncertainty” still lies ahead.
The IMF was already positive in its global economic forecasts in January and estimated the GDP rate (gross domestic product) this year to be 5.5%. At the time, this was a 0.3 percentage point increase over previous projections.
However, President Joe Biden’s massive budget and improved vaccine rollouts over the past three months have made the IMF even more confident about the rest of the year.
“We now expect further acceleration: partly because of additional political support – including the new tax package in the US – and partly because of the expected recovery from vaccines in many advanced economies later this year,” IMF chief executive Kristalina Georgieva said in a speech on Tuesday.
“This enables an upward revision of our global forecast for this year and for 2022.”
The new forecasts will be announced on Tuesday when the fund releases its latest global economic outlook.
Earlier this month, Biden signed a fiscal stimulus plan that will allow most Americans to make direct payments of up to $ 1,400. The program, which is already under way, should also support the global economy; The Organization for Economic Co-operation and Development has estimated that the bill will add about 1 percentage point to global growth this year.
Faster progress in ending the health crisis could increase global GDP by nearly $ 9 trillion by 2025.
IMF managing director
The rate of coronavirus vaccinations around the world is also picking up speed. On Monday, Biden said 90% of adults in the US will be eligible for a Covid-19 vaccine by April 19. Meanwhile, the UK plans to offer the full Covid-19 shot to all eligible populations by the end and the European Union expects 70% of the adult population to be vaccinated this summer.
However, the IMF has warned that one of the risks to the outlook is the high level of uncertainty created by the pandemic, including potential new variants.
“One of the greatest dangers for us is the extremely high level of uncertainty,” said Georgieva.
At the same time, it has found that the economic recovery is uneven.
“While the overall outlook has improved, the outlook diverges dangerously not only within nations but also between countries and regions. We are indeed seeing a multi-speed recovery that is increasingly being driven by two engines – the US and China,” said Georgieva.
“They are part of a small group of countries that will be well above their pre-crisis GDP levels by the end of 2021. But they are the exception, not the rule.”
As a result, the IMF is advising countries to speed up the production, distribution and use of vaccines. It was also recommended to keep fiscal policy loose and invest in climate-friendly policies.
“That way we can protect people’s health – and accelerate recovery. Faster progress in ending the health crisis could increase global GDP by nearly $ 9 trillion by 2025. But the window of opportunity is closing rapidly. The longer it takes.” to speed up the vaccine. ” Production and launch, the harder it will be to make those profits, “added Georgieva.