covid variants are a risk

LONDON – The International Monetary Fund has become more optimistic about the global economy as coronavirus vaccinations are administered around the world. He is concerned, however, about the risk that the new variants of Covid represent for post-pandemic recovery.

According to its latest World Economic Outlook, released on Tuesday, the institution now expects global economic growth of 5.5% this year – an increase of 0.3 percentage point from the forecast. ‘October. He sees global GDP (gross domestic product) increase by 4.2% in 2022.

“Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and the ability of politicians to provide effective support until that happens,” the economist said. IMF Chief Gita Gopinath in a blog post.

“There remains huge uncertainty and the outlook varies considerably from country to country.”

The world has seen an increase in the number of Covid-19 infections and deaths in recent months, as new variants of the coronavirus have spread rapidly. These have been described as more infectious and are potentially more fatal than the original strain.

As a result, many countries have intensified their social restrictions, which has inflicted further economic suffering.

In fact, the IMF has cut its GDP forecast for the euro area this year by 1 percentage point. The 19-member region, which has been hit hard by the pandemic, is now expected to grow 4.2% this year.

Germany, France, Italy and Spain – the four largest economies in the euro area – have also seen their growth forecasts cut for 2021.

Economic activity in the region slowed in the last quarter of 2020 and this is expected to continue through the first part of 2021. The IMF does not expect the euro area economy to return to end levels. 2019 before the end of 2022.

In contrast, the United States is expected to experience stronger growth than expected this year, according to the IMF.

The IMF revised its GDP forecast up by 2 percentage points due to strong momentum in the second part of 2020 and additional fiscal support. GDP is now estimated at 5.1% this year.

The U.S. Congress approved nearly $ 900 billion in a stimulus package in December, and President Joe Biden has suggested more back-up plans may arrive soon.

As for emerging markets, China is expected to grow above 8% this year, the IMF said.

“China is back to its projected pre-pandemic level in Q4 2020, ahead of all major economies. The United States is expected to exceed its pre-Covid levels this year, well ahead of the eurozone,” said Tuesday Gopinath. .

The IMF reaffirmed that governments will need to continue to support their economies through fiscal stimulus measures in order to support economic recovery.

“Policy measures must ensure effective support until the recovery is firmly underway, with emphasis on promoting the key imperatives of increasing potential output, ensuring participatory growth that benefits all and accelerating the transition to a lower carbon dependency, “Gopinath added.