The latest IMF forecasts that the global economy will grow by 6% in 2021-
The world economic recovery is becoming more divergent
Our reporter Gao Weidong
The latest issue of the World Economic Outlook predicts that the global economy will grow by 6% in 2021. It is expected that the growth prospects of emerging markets and developing economies will deteriorate in 2021, especially the growth forecasts of emerging and developed economies in Asia.
These adjustments reflect the trend of the epidemic and changes in supporting policies.
Multilateral actions play a key role in reducing the differentiation of recovery and improving global prospects. Only by implementing coordinated and well-directed policy actions at the multilateral and national levels can all economies achieve a lasting recovery.
On July 27, local time, the International Monetary Fund (IMF) released the latest issue of the World Economic Outlook, predicting that the global economy will grow by 6% in 2021. Compared with the forecast in April, there is no change, but the forecast for each group of countries is made. Up or down adjustment.
The growth prospects of emerging markets and developing economies are expected to deteriorate in 2021, especially emerging Asian economies.
In contrast, growth forecasts for advanced economies have been revised upwards.
These adjustments reflect the trend of the epidemic and changes in supporting policies.
It is predicted that the global economy will grow by 4.9% in 2022, which is an increase of 0.5% from the forecast in April.
IMF chief economist Gita Gopinath (Gita Gopinath) said that the increase in global economic growth in 2022 is mainly due to the upward adjustment of economic growth forecasts for the United States and the Eurozone.
The IMF pointed out that since the release of the World Economic Outlook forecast in April 2021, the economic prospects of various countries have further diverged.
Vaccine access has become a major fault in the world economy.
Along this fault, the global recovery has formed two camps: one group is expected to further resume normal economic activities later this year, almost all of these countries are advanced economies, and the other group is still facing another surge in infections. , A country with a rising death toll.
However, as long as the virus continues to spread somewhere in the world, countries with few cases of infection can not guarantee a smooth recovery.
The IMF predicts that the GDP of advanced economies will grow by 5.6% in 2021 (up from the forecast in April by 0.5%, the same below), of which the US economy will grow by 7% (up by 0.6%), and the Japanese economy will grow by 2.8% ( Decrease by 0.5 percentage points), the British economy will grow by 7% (up by 1.7 percentage points), the Eurozone economy will grow by 4.6% (up by 0.3 percentage points), and the economies of Germany, France, Italy, and Spain in the Eurozone will grow by 3.6% respectively. , 5.8%, 4.9%, and 6.2%. Compared with the forecast in April, there is no change in Germany and France. Italy has increased by 0.7 percentage points, and Spain has reduced by 0.2 percentage points.
Forecasts show that the GDP of emerging markets and developing economies will grow by 6.3% in 2021 (down by 0.4%), among which the five ASEAN countries will grow by 4.3% (down by 0.6%), and the Indian economy will grow by 9.5% (down by 3%) ), the Russian economy will grow by 4.4% (up by 0.6%), the Brazilian economy will grow by 5.3% (up by 1.6%), and the South African economy will grow by 4% (up by 0.9%).
It is predicted that China's economy will grow by 8.1% in 2021, which is the same as the forecast in January, and will grow by 5.7% in 2022, which is an increase of 0.1 percentage point from the April forecast.
Geeta Gopinat pointed out that the global economy continues to recover, but the gap between developed economies and many emerging markets and developing economies is getting wider.
In 2021, the growth prospects of advanced economies improved by 0.5 percentage points, but the growth forecasts for emerging markets and developing economies were revised down by 0.4 percentage points, due to the significant deterioration in the growth prospects of emerging Asian economies.
Geeta Gopinat emphasized that such adjustments to the economic growth forecast largely reflect the development and changes of the epidemic, that is, the delta mutant virus has become the main epidemic strain.
Nearly 40% of the population in developed economies have been fully vaccinated.
In contrast, the rate of vaccination in emerging market economies is 11%, while very few people in low-income developing countries are vaccinated.
The reasons for the upward revision of the growth forecast include faster-than-expected vaccination rates and the return of economic activity to normal. The factors that led to the downward revision of the growth forecast include the lack of access to vaccines in some countries and the emergence of a new wave of epidemics, especially India.
Gita Gopinat said that another reason for the more severe divergence in the recovery process is the difference in policy support.
Developed economies continue to provide large-scale financial support and have announced support measures of up to US$4.6 trillion in 2021 and beyond.
The upward revision of the global growth forecast in 2022 mainly reflects the expected additional financial support from the United States and the "Next Generation EU Fund".
In addition, most of the measures in emerging markets and developing economies have expired in 2020, and they are preparing to rebuild fiscal buffers.
Some emerging market economies, such as Brazil, Hungary, Mexico, Russia, and Turkey, have also begun to increase monetary policy interest rates to prevent price increases.
Commodity exporting countries benefit from higher-than-expected commodity prices.
Regarding the current increase in overall inflation, Gita Gopinat believes that inflationary pressure is temporary, and inflation in most advanced economies is expected to fall back to pre-epidemic levels in 2022. The reasons are as follows:
First, the abnormally high inflation level is a temporary phenomenon to a large extent. It is caused by the sectors affected by the epidemic, such as tourism and hotel industries, and is also compared with the abnormally low price levels last year (such as bulk commodities). Price) compared to.
Second, the overall employment rate in most countries is still much lower than the level before the epidemic. Although wages in some sectors have increased rapidly, overall wage growth is still within the normal range.
With the improvement of health indicators and the expiration of unconventional income support measures, recruitment difficulties in certain departments are expected to subside, and wage pressures will be eased.
Finally, long-term inflation expectations, a survey-based and market-based indicator, are still effectively anchored. Some factors (such as automation) that make prices less sensitive to changes in labor market oversupply may have intensified during the epidemic.
The IMF emphasized that although expanding vaccine supply can improve economic prospects, the risk of global economic recovery is downward.
If the spread of the vaccine is slower than expected, the virus may mutate further.
The emergence of highly infectious mutant viruses may seriously hinder the recovery process and may cause a total loss of US$4.5 trillion in global GDP by 2025.
In addition, in an environment where asset valuations are too high, if the market suddenly re-evaluates the outlook for monetary policy, especially in the United States, the financing environment may tighten sharply.
US stimulus spending may also be weaker than expected.
The worsening of the epidemic and the tightening of the financing environment will cause a double blow to emerging markets and developing economies, causing a serious setback in the recovery process.
Given that multilateral actions play a key role in reducing the differentiation of recovery and improving the global outlook, the IMF recommends, first of all, to ensure the rapid provision of vaccines, diagnosis and treatment on a global scale.
This will save countless lives, prevent the emergence of new mutant viruses, and bring trillions of dollars in additional output to the global economy.
IMF staff recently proposed a US$50 billion plan to end the epidemic, which was endorsed by the World Health Organization, the World Bank, and the World Trade Organization.
The plan puts forward the goal of increasing vaccination rates in all countries to at least 40% and 60%, respectively, by the end of 2021 and mid-2022, while ensuring that adequate diagnosis and treatment are provided.
Second, ensure that economies with limited funds can continue to obtain international liquidity.
Major central banks should communicate clearly on their monetary policy prospects to ensure that inflation concerns do not trigger a rapid tightening of the financing environment.
The IMF proposes to launch a new round of general allocation of Special Drawing Rights (SDR) equivalent to US$650 billion, of which US$250 billion will be allocated to emerging markets and developing economies.
Finally, countries should continue to implement corresponding policies in accordance with the crisis stage of their country: First, get out of the most severe stage of the crisis. To this end, priority should be given to medical and health expenditures, including expenditures on vaccinations, and to provide services to affected households and businesses. Targeted support; the second is to consolidate the recovery, focus on expanding fiscal and monetary support based on the available policy space, including remedial measures to reverse education losses, and through targeted recruitment subsidies and efficient bankruptcy resolution mechanisms to support the flow of labor and capital to growing Sector; The third is to invest in the future to promote the realization of long-term goals, including expanding production capacity, accelerating the transition to low-carbon dependence, making full use of the benefits of digitalization, and ensuring fair sharing of benefits.
Gita Gopinat emphasized that only by repelling the epidemic on a global scale can the recovery be stable; only by implementing coordinated and well-directed policy actions at the multilateral and national levels can all economies achieve a lasting recovery.
Without these policy actions, the division of the global economy will intensify, the gap between the rich and the poor will further widen, and social unrest and geopolitical tensions will worsen.