Global economy is set to expand at a faster rate this year than expected earlier as vaccination against the coronavirus could strengthen activity later this year, underpinned by further policy support, the International Monetary Fund said Tuesday.
In its latest World Economic Outlook report, the lender raised the global growth forecast for this year to 5.5 percent from 5.2 percent seen in October.
World economic growth is projected at 4.2 percent in 2022.
The IMF estimated 3.5 percent contraction in global growth in 2020, which was better than the 4.4 percent shrinkage seen in October. The revision reflects the stronger-than-expected momentum in the second half of 2020, the lender said.
"There remains tremendous uncertainty and prospects vary greatly across countries," IMF Chief Economist Gita Gopinath said.
The latest forecast reflect expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies, the IMF said.
Further, access to medical interventions, effectiveness of policy support, exposure to cross-country spillovers, and structural characteristics entering the crisis could led to significant variations in the strength of the recovery across countries, the report added.
"Greater success with vaccinations and therapeutics and additional policy support could improve outcomes, while slow vaccine rollout, virus mutations, and premature withdrawal of policy support can worsen outcomes," Gopinath said.
"If downside risks were to materialize, a tightening of financial conditions could amplify the downturn at a time when public and corporate debt are at record highs worldwide."
The IMF stressed the need for strong multilateral cooperation to bring the pandemic under control across the world.
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