The International Monetary Fund (IMF) has in its latest World Economic Outlook (WEO) projected global growth for 2021 to be 5.5 per cent as against 5.2 per cent it forecast in October 2020.
Gita Gopinath, Chief Economist of the fund, said this during a media conference on Tuesday in Washington D. C at the release of the January update on the WEO with revised growth forecasts for the world.
She said that the new forecast was moderating to 4.2 per cent in 2022.
According to her, the upgrade for 2021 reflects the positive effects of the onset of vaccinations in some countries.
It also reflects additional policy support at the end of 2020 in economies such as the United States and Japan and an expected increase in contact-intensive activities as the health crisis wanes.
She however, said that with advanced economies generally expected to recover faster, progress made towards convergence over the last decade was at risk of reversing.
“Over 50 per cent of emerging markets and developing economies that were converging towards advanced economies per capita income over the last decade are expected to diverge over the 2020 to 2022 period.
“Oil exporters and tourism-based economies face particularly difficult prospects given the subdued outlook for oil prices and expected slow normalisation of cross-border travel”, she added.
The economist added that financial stability should be ensured in these highly uncertain times.
“Monetary policy should remain accommodative to support the recovery where inflation is not at risk, with close attention paid to containing the risks that will likely emerge from historically low interest rates.” (NAN)