IMF lifts global growth forecast in light of COVID vaccine progress

Last week, the International Monetary Fund (IMF), raised its forecast for global economic growth in 2021 as hopes of a “vaccine-powered” rebound take root. 

The IMF’s new global forecast is for a growth of 5.5 per cent this year and 4.2 per cent in 2022. 

Regionally, it predicts that the United States and Japan will rebound to pre-pandemic levels towards the end of the year, whereas economic activity in Britain and the euro area is likely to remain below pre-pandemic levels into 2022.

In the US and Japan, the IMF’s more optimistic outlook was a combination of positivity due to the vaccine, and a response to the increased Government spending measures announced towards the end of the year.

Despite optimism surrounding recent vaccine developments, the IMF remains concerned about the surge in infections towards the end of 2020 in some countries. 

Positivity surrounding the US, might also be dampened by US labour market statistics released on Friday that shows that the US labour market’s long awaited recovery remains sluggish, with only 49,000 jobs added in January.

Indeed, the IMF said there is still “extraordinary uncertainty” about the future outlook.