Supported by vaccination programs, stimulus packages and adaptation to closures

International Monetary: Western economies recover faster than expected

The International Monetary Fund expects that the strongest recovery from the repercussions of the Corona pandemic will be of the benefit of the economies of the United States of America, the United Kingdom and other rich western countries, as this will lead to a faster than expected growth of the global economy during the current year.

In a recent report, the fund said that successful vaccination programs and the ability of companies to adapt to the challenges of closures, in addition to the stimulus package presented by US President Joe Biden, worth $ 1.9 trillion, are key factors for the positive outlook.

growth

The International Monetary Fund stated that the global economy will grow by 6% in 2021, and by 4.4% during the next year, after it had previously expected the global economy to grow by 5.2% this year, and by 4.2% in 2022.

The Fund pointed out that governments around the world spent 16 trillion dollars in their attempts to mitigate the economic damage caused by the outbreak of the "Covid-19" virus, indicating that had it not been for the unprecedented political response to the spread of the pandemic, the global economy would have witnessed a contraction of 10% over the past year.

He stated that the recovery will be uneven between countries, with faster progress in rich countries and Western economies due to their vaccination programs, and the financial strength of the stimulus packages, noting that inequality would increase the gap between countries.

Developed countries

The Fund indicated that among the developed countries the United States recorded the largest improvement, as the International Monetary Fund raised its forecast for growth by 1.3 points, to 6.4% this year, and 1.0 points to 3.5% in 2022, while the UK economy is expected to grow. By 5.3% during 2021, and by 5.1% in the next year.

The IMF noted that the United Kingdom was one of the most affected Western economies in 2020, but expected it to be the fastest growing G7 country in 2022, overtaking the United States, Japan, Germany, France, Italy and Canada.

Way out

The economic advisor to the International Monetary Fund, Gita Gopinath, said that "the economic outlook in the United Kingdom has been strengthened by the vaccine distribution program."

She added, "A year has passed since the outbreak of the (Covid-19) pandemic, and the global community is still facing severe social and economic pressures with high human losses and millions of unemployed."

And Gopinath continued, "Nevertheless, even with the increase in the degree of uncertainty about the course of the pandemic, the way out of this health and economic crisis is becoming increasingly apparent."

She pointed out that "thanks to the ingenuity of the scientific community, hundreds of millions of people are being vaccinated, as this is expected to lead to the restoration of activities in many countries later this year."

Fast action

Gopinath stated that the rapid measures taken by the governments of Western countries prevented a recurrence of the financial collapse in 2008, indicating that as a result, the losses in the medium term would be less than 3% of global GDP, in contrast to what happened after the 2008 crisis, as well. Emerging markets and low-income countries are expected to suffer larger losses, given their limited ability to stimulate their economies.

Cumulative losses

Gopinath explained that “according to the calculations of the International Monetary Fund, the cumulative losses of per capita income during the period from 2020 to 2022, compared to pre-pandemic projections, will be 20% of GDP per capita in emerging markets and developing economies (excluding China), while It is expected that the rate of losses in advanced economies will be about 11%.

Income disparity

The International Monetary Fund has reported that income inequality is likely to increase dramatically due to the pandemic, with an estimated 95 million additional people entering extreme poverty over the past year, compared to pre-pandemic projections.

He explained that the expected recovery of global economies came after the downturn, which was difficult, especially for the youth, women, workers with relatively low educational qualifications, and informal workers.

- Rapid measures taken by governments prevented a recurrence of the 2008 financial crash.

Follow our latest local and sports news, and the latest political and economic developments via Google news