International Monetary Fund ups global GDP growth forecast, warns of poverty rise

People head into Oxford Circus train station in central London during England’s third lockdown on March 26

The global economy shrank by 4.3 per cent a year ago, over two-and-a-half times more than during the global financial crisis of 2009. Considering the uncertainty caused by Covid-19 cases, the World Bank gave a range for India's economic growth - from 7.5 per cent to 12.5 per cent - in FY22.

"Higher debt service costs are also expected to constrain their ability to address social needs, including rising poverty and growing inequality, or to correct the setback in human capital accumulation during the crisis", it said.

Because a financial crisis was averted, medium-term losses are expected to be smaller than after the 2008 global financial crisis, at around 3%. In fact, India will be the only country that is estimated to register double-digit growth. Indications of this were given by the IMF's economic counsellor and director of research, Gita Gopinath.

The IMF added that it expects US GDP to grow by 6.4% in 2021 compared to its previous estimates.

The nation's economy will grow by 4.3% in 2022, the International Monetary Fund forecast in its latest World Economic Outlook report.

She cautioned that a six-month delay in having widespread vaccinations in advanced economies and nine months for emerging and developing economies would hinder the economic recovery.

While China's economy had already returned to pre-pandemic GDP in 2020, many other emerging markets and developing economies are not expected to do so until 2023, the WEO report showed.


The report also said that the recovery in emerging markets is expected to be slower than in advanced economies - with significant divergence across countries - driven by the less supportive stance of central banks over the past few months, in response to higher commodity prices; higher domestic inflation; the improved economic outlook and higher U.S. rates. The average inflation rate would further fall to 4.1 per cent in the next financial year.

The newly released report projected the global economy to expand 4.4 per cent in 2022, 0.2 percentage point above its January forecast.

The global economy is estimated to have contracted by 3.3% in 2020, and the International Monetary Fund expects this would have been three times worse without the "extraordinary" policy support rolled out by nations.

United Kingdom chancellor Rishi Sunak said: "Our package of support continues to be one of the largest and most comprehensive in the world, with more than £350bn ($484bn) spent on the response to COVID so far". Vaccinations, she writes, are likely to power recoveries in many countries in 2021. The Washington-based global financial institution, in its annual World Economic Outlook ahead of the annual Spring meeting with the World Bank, said the Indian economy is expected to grow by 6.9 per cent in 2022. "We will continue to work closely with our G7 and G20 partners to help ensure that no country is left behind in the global economic recovery from the pandemic".

This year, only Turkey and Romania are projected to achieve higher growth rates, of 6%, and the Serbian economy is expected to grow at a rate of 5.0%.

In 2021, consumer prices are expected to increase by 0.7%, compared to 0.8% projected in October.

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