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Wednesday, 7 April 2021

IMF more upbeat on global growth, says covid-end “increasingly visible”

The IMF sees the global economy growing this year at a faster pace than previously expected, saying in its updated World Economic Outlook that it now expects global growth to come in at 6% — 0.5 percentage points higher than the 5.5% growth it had penciled in three months ago — and 4.4% in 2022. An end to the pandemic and the economic crisis is “increasingly visible,” thanks to the global vaccination rollout, an overall adaptation to the ways of pandemic life, and large-scale stimulus measures around the world, said IMF chief economist Gita Gopinath. Tap / click here to read the full report (pdf).

In more ways than one, “uneven” is the overarching theme of the outlook: The report sees major economies — primarily the US and China — leading the pack in terms of economic growth this year. The US is on track to record higher GDP growth in 2021 than it did pre-covid, while China already achieved that milestone in 2020. Advanced economies are mostly expected to rebound to pre-covid growth in 2022 and many developing economies aren’t expected to get to that point before “well into 2023,” said Gopinath.

And the divergence is not just between countries — the IMF sees disparities within individual countries. This includes a greater degree of job losses “in those sectors with larger concentrations of younger or lower-skilled workers as well as in sectors more vulnerable to automation,” particularly as the pandemic spurred the shift to digitalization.

This is likely to lead to “significantly wider gaps in living standards,” Gopinath said. 2020-22 per capita losses in emerging economies will be almost double that of advanced economies, while 95 mn people have been pushed into extreme poverty since the onset of covid, she noted.

The antidote: “Averting divergent outcomes will require, above all, resolving the health crisis everywhere. At the same time, economic policies will need to limit persistent damage, secure the recovery, and prepare for the post-COVID world, while being mindful of available policy space,” Golpinath says.

WHERE IS EGYPT IN ALL OF THIS? The IMF upgraded Egypt’s growth projections for FY2021-2022 by 0.2 percentage points to 5.7%, up from its 5.5% growth forecast in January. Output is expected to accelerate to 5.8% by FY2025-2026.

Other Egypt figures: Egypt’s current account deficit is expected to widen to 4% by the end of the currency fiscal year (from 3.1% in FY2019-2020) before narrowing again to 2.5% in FY2025-2026. The report also sees inflation accelerating to 6.3% in 2021 and 7.4% in 2022, up from 5.7% last year.

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