“We expect a further acceleration” of growth, the IMF boss said. Thanks to stimulus and vaccination packages, the institution sees an improvement in the outlook for the global economy.
The managing director of the International Monetary Fund (IMF) on Tuesday reported an improving outlook for the world economy due to stimulus and vaccination plans against Covid but he warned of the risks of a recovery. unequal between countries.
“We expect a further acceleration” of growth, Kristalina Georgieva said in a speech before the spring meetings. However, he did not disclose the International Monetary Fund’s new 2021 forecast to be published on April 6.
Emphasizing “extremely high uncertainty”, he described “a multi-speed recovery” with the United States and China driving global growth and developing countries lagging behind, a risk for Europe’s future. Mondial economy.
The IMF managing director did not quote specific figures whereas the Washington institution’s traditional report on new prospects for the world economy will be published on April 6 in just one week.
But he said the upward change in growth was “partly due to additional policy support” including U.S. President Joe Biden’s massive $ 1.9 trillion plan, and “partly” due to expected impacts. vaccination campaigns later in the year in “many” advanced economies.
This improvement is the result of an “extraordinary effort” of nurses, doctors, key workers and researchers around the world, he said, as governments have made “extraordinary” budget proposals for a combined amount of 16,000 billion dollars.
Without this synchronized help, the contraction in global GDP recorded in 2020 (-3.5%) would be “three times greater”, which also underlined the IMF boss.
But the Fund also cited “a multi-speed recovery increasingly driven by two engines: the United States and China” as part of “a small group of countries” that will exceed their pre-crisis levels by the end of the year. ito.
“Very high uncertainty”
For Kristalina Georgieva, “one of the biggest risks remains very high uncertainty”.
“It all depends on the trajectory of the pandemic”, he also explained because vaccination progress is uneven and new strains of the virus are undermining growth prospects, “especially in Europe and Latin America.”
Moreover, there may be “more pressure” on “weak” emerging markets with limited financial capacities. “Many have been over-exposed in hard-hit sectors, such as tourism,” the leader continued.
These countries are the ones with restricted access to vaccines while being exposed to a “high” risk of over -indebtedness. So the Washington institution is concerned about the effects of an accelerated recovery in these countries.
“Continued growth in the United States could benefit many countries by increasing trade,” Kristalina Georgieva said. But, in a desynchronized global economic recovery, if advanced countries suddenly raise their interest rates, it will increase the debt refinancing costs of some emerging countries that are already lagging behind in recovery. this. .
Under these conditions, the IMF boss recommends that countries focus on emerging from the crisis by speeding up the production and distribution of vaccines.
It also recommends continuing to support the most vulnerable households, to invest in the future, especially in infrastructure, education and health, emphasizing the challenge: “that everyone will benefit from a historic transition to greener and smarter economies ”.
It also encourages increased international aid for vulnerable countries. And to mention a new IMF study showing that low-income countries will need to deploy about 200 billion dollars over five years to fight the pandemic.
They will also need an additional $ 250 billion to “get back on track to catch up with higher income levels.” Kristalina Georgieva recalled that the Fund provided more than $ 107 billion in new financing in 85 countries and decided on debt service for 29 of its poorest members.