## Global Economic Outlook and Policy Priorities

_IMF News, February 6, 2021_

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**Canonical URL:** [Global Economic Outlook and Policy Priorities](https://www.imf.org/en/news/articles/2021/02/06/sp020621-dmd-sayeh-keynote-warwick-economics-summit)

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## Bibliographic details
- Published: February 6, 2021

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### Economic outlook and key figures
- Global growth projected at 5.5 percent in 2021 (IMF latest forecast).
- Global contraction of 3.5 percent in 2020 (the worst peacetime recession since the Great Depression).
- Tremendous uncertainty surrounds the forecast, driven by the race between the mutating virus and vaccines and the need for continued policy support until herd immunity is achieved.
- Fiscal and monetary support deployed globally:
  - $14 trillion in fiscal support to households and firms.
  - $9 trillion in monetary support through interest rate cuts and other measures by central banks.
- IMF operational response since the start of the pandemic:
  - Approved over $105 billion in total financing for 85 countries.
  - Expanded concessional financing for low-income countries and provided immediate debt relief to 29 of the poorest, most vulnerable countries.
  - Provided real‑time policy advice and capacity development support to over 175 countries.

### Immediate priority: defeat the pandemic
- Vaccination and medical access for low- and middle-income economies is essential to a sustainable global recovery.
- Actions required:
  - Ramp up vaccine production.
  - Bolster funding for the COVAX facility.
  - Improve logistics of vaccine delivery.
- Estimated economic benefit:
  - Faster vaccinations would raise global income cumulatively by $9 trillion over 2020‑2025.

### Near-term policy priorities to limit scarring
- Maintain economic lifelines and policy support where the virus is surging to:
  - Protect households.
  - Prevent bankruptcies of otherwise viable firms.
  - Enable a faster rebound once constraints are lifted.
- Prioritization where fiscal space is limited:
  - Spending prioritized for health and transfers to the poor.
  - Gradual roll back of lifelines only when infections are durably declining and economic activity is normalizing, while cushioning impacts on the most vulnerable.

### Addressing divergence and sovereign debt risks
- Concern: around half of all emerging markets and developing economies—previously converging in per capita income—are now expected to diverge from advanced economies.
- Policy responses to reverse divergence:
  - Provide grants, highly concessional loans, and debt relief.
  - Address unsustainable sovereign debt where it may arise, including through coordinated frameworks and bilateral debt service relief.

### Once‑in‑a‑generation opportunity: green and digital investment
- The IMF calls for synchronized investment in green and digital infrastructure as the pandemic comes under control.
- Green investment and policy examples:
  - Efficient mass transit systems.
  - Smart electricity grids.
  - Phasing out harmful subsidies.
  - Combine green investments with appropriate carbon pricing to pursue net zero emissions by mid-century and create millions of new jobs (IMF estimate).
- Digital investment priorities:
  - E‑commerce, e‑learning, e‑government, digital money and payments.
- Labor and human capital:
  - Increased investment in training, re‑skilling and high-quality education to support worker transitions from shrinking to expanding sectors.

### IMF role and actions going forward
- Incorporating climate change into country and financial risk assessments.
- Scaling up capacity development on climate policy.
- Working with countries on policies to enable the digital paradigm as an engine of growth and financial inclusion.

*Keynote Speech by Deputy Managing Director Antoinette M. Sayeh, February 6, 2021*

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## References

- [https://www.imf.org/en/about/senior-officials/bios/antoinette-monsio-sayeh](https://www.imf.org/en/about/senior-officials/bios/antoinette-monsio-sayeh)
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_Source: https://www.imf.org/en/news/articles/2021/02/06/sp020621-dmd-sayeh-keynote-warwick-economics-summit_