{
  "title": "Global Economy 2021: Prospects and Challenges",
  "publication": "IMF News, March 20, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/03/20/sp-global-economy-2021-prospects-and-challenges",
  "canonical": "https://www.imf.org/en/news/articles/2021/03/20/sp-global-economy-2021-prospects-and-challenges",
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  "summary": "IMF projection in January: 2021 global growth at 5.5 percent.",
  "publishDate": "2021-03-20",
  "sections": [
    {
      "heading": "Global Outlook",
      "content": "- IMF projection in January: 2021 global growth at 5.5 percent.\n- Prospects of a stronger recovery emerging because of additional fiscal stimulus, especially in the U.S., and the prospects of broader vaccination.\n- The IMF will update global forecasts in the new World Economic Outlook coming out in early April.\n- The global recovery is described as incomplete and unequal:\n  - Incomplete because, despite a stronger than expected recovery in the second half of 2020, GDP remains well below pre-pandemic trends in most countries.\n  - Recovery paths differ across countries and sectors.\n- China is noted to have \"in many ways, already completed its recovery,\" returning to pre-pandemic growth levels ahead of all large economies.\n  - Growth in China still \"lacks balance, with private consumption lagging investment.\"\n  - Expectation: \"consumption will catch up, as investment growth normalizes.\""
    },
    {
      "heading": "Growing Gap",
      "content": "- Outside of China, signs that the gap between advanced economies and emerging markets is growing.\n- Exact IMF estimates:\n  - \"Cumulative income per capita in emerging and developing countries, excluding China, between 2020 and 2022 will be 22 percent lower than what it would have been without the pandemic.\"\n  - \"That will translate into close to 90 million people falling below the extreme poverty threshold since the pandemic started.\"\n- China noted as \"a bright spot in its continued fight against poverty,\" but the pandemic has hurt vulnerable people the most even there."
    },
    {
      "heading": "Exceptional Uncertainty",
      "content": "- Uncertainty about the recovery described as \"exceptionally large.\"\n- Key sources of uncertainty:\n  - Unknown duration of the health crisis; unequal access to vaccines across advanced and emerging economies.\n  - \"Low-income countries might not see significant vaccination well into 2022.\"\n  - Risk of \"the spread of resistant mutations that threatens to reduce the efficacy of current vaccines and could undermine or delay the recovery.\"\n  - Uncertainties about the effectiveness of policy actions and differences in what countries can do; many countries face limited fiscal space and higher debts.\n  - \"Tighter financial conditions could exacerbate vulnerabilities in countries with high public and private debt.\"\n  - Recent increases in bond yields as growth outlook for some advanced economies improves, leading markets to expect an earlier withdrawal of monetary stimulus.\n- Medium- and long-term risks:\n  - In the medium-term, the crisis could leave deep scars: \"advanced economies have seen their output reduced almost 5 percent below pre-recession trends five years after the beginning of a recession.\"\n  - Worse outcomes possible in countries that cannot afford a strong macroeconomic response and/or have large services sectors more affected by the pandemic.\n  - The crisis has had a disproportionate impact on the young, the low-skilled, and women.\n  - \"In the long-term, rising carbon emission levels remind us that climate change is also a significant challenge, and Asia has a major role in addressing it.\""
    },
    {
      "heading": "The Way Forward (Three Priorities)",
      "content": "- First priority: end the pandemic swiftly.\n  - International community must \"swiftly ramp up vaccine production.\"\n  - Ensure low-income countries have financing to procure and distribute vaccines.\n  - Requires bolstering funding for the COVAX initiative and the logistics for delivery.\n  - The IMF asks that leading economies support vaccine production and provide finance to developing countries.\n- Second priority: maintain economic support and calibrate it to the stage of recovery and the pandemic.\n  - Where the pandemic continues: priority to protect lives and livelihoods.\n  - As it wanes: support should become more targeted, focusing on mitigating scarring, supporting the reallocation of resources, and ensuring the post-pandemic economy is inclusive and sustainable.\n  - Best policies: those that support the recovery, help strengthen resilience, and tackle long-standing challenges (examples: foster the transition to green energy and digitalization).\n  - China-specific policy guidance:\n    - Policies announced during the \"Two Sessions\" to strengthen high-quality growth, rein in carbon emissions, and improve energy efficiency should support rebalancing toward greener and more consumption-oriented growth.\n    - Achieving faster and higher-quality growth requires mutually enhancing reforms: strengthening social safety nets and green investment; opening up of domestic markets; continuing to reform state companies; and ensuring private and government-owned firms can compete on an equal basis.\n    - A strong effort in this direction \"will raise productivity and income, and lead to more balanced and consumption-driven growth.\"\n- Third priority: mitigate divergence across countries.\n  - Includes providing access to liquidity for developing economies and preventing climate change from hampering their economic growth and convergence."
    },
    {
      "heading": "IMF Support",
      "content": "- IMF actions highlighted:\n  - Expanded concessional financing and provided debt relief to many of its poorest members.\n  - \"A new SDR allocation is under consideration to help address the global long-term need for reserves.\"\n  - Worked with the G20 on bilateral debt service relief through the Debt Service Suspension Initiative and on a Common Framework to address unsustainable sovereign debt.\n  - Incorporating climate change into country and financial risk assessments, while scaling up capacity development.\n- The IMF \"appreciate[s] China’s continuing support to all these endeavors.\""
    },
    {
      "heading": "Conclusion",
      "content": "- Call for international cooperation: \"the international community must come together and help each other to end this pandemic and lay the foundation for a more balanced, inclusive, and sustained global recovery for all.\"\n\nGeoffrey Okamoto, First Deputy Managing Director, IMF — China Development Forum (session V venue I), March 20, 2021.\n\n---\n\n\n References\n\n- Geoffrey W.S. Okamoto\n- People's Republic of China and the IMF\n- Speeches\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/03/20/sp-global-economy-2021-prospects-and-challenges"
    }
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    "Published: March 20, 2021",
    "IMF projection in January: 2021 global growth at 5.5 percent.",
    "Prospects of a stronger recovery emerging because of additional fiscal stimulus, especially in the U.S., and the prospects of broader vaccination.",
    "The IMF will update global forecasts in the new World Economic Outlook coming out in early April.",
    "The global recovery is described as incomplete and unequal:",
    "China is noted to have \"in many ways, already completed its recovery,\" returning to pre-pandemic growth levels ahead of all large economies.",
    "Outside of China, signs that the gap between advanced economies and emerging markets is growing.",
    "Exact IMF estimates:",
    "China noted as \"a bright spot in its continued fight against poverty,\" but the pandemic has hurt vulnerable people the most even there.",
    "Uncertainty about the recovery described as \"exceptionally large.\"",
    "Key sources of uncertainty:",
    "Medium- and long-term risks:",
    "First priority: end the pandemic swiftly.",
    "Second priority: maintain economic support and calibrate it to the stage of recovery and the pandemic.",
    "Third priority: mitigate divergence across countries.",
    "IMF actions highlighted:",
    "The IMF \"appreciate[s] China’s continuing support to all these endeavors.\"",
    "Call for international cooperation: \"the international community must come together and help each other to end this pandemic and lay the foundation for a more balanced, inclusive, and sustained global recovery for all.\"",
    "[Geoffrey W.S. Okamoto](https://www.imf.org/en/About/senior-officials/Bios/geoffrey-w-s-okamoto/)",
    "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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