## World Economic Outlook Update, January 2021: Policy Support and Vaccines Expected to Lift Activity

_World Economic Outlook, January 2021_

## Source details

**Canonical URL:** [World Economic Outlook Update, January 2021: Policy Support and Vaccines Expected to Lift Activity](https://www.imf.org/en/publications/weo/issues/2021/01/26/2021-world-economic-outlook-update)

## Other formats

- [Markdown version](/en/publications/weo/issues/2021/01/26/2021-world-economic-outlook-update/index.md)
- [Structured JSON version](/en/publications/weo/issues/2021/01/26/2021-world-economic-outlook-update/index.json)
- [Bundle manifest](/en/publications/weo/issues/2021/01/26/2021-world-economic-outlook-update/bundle-manifest.json)

## Bibliographic details
- Published: January 20, 2021

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### Global outlook and headline projections
- Amid exceptional uncertainty, the global economy is projected to grow 5.5 percent in 2021 and 4.2 percent in 2022.
- The 2021 forecast is revised up 0.3 percentage point relative to the previous forecast, reflecting expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies.
- The global growth contraction for 2020 is estimated at -3.5 percent, 0.9 percentage point higher than projected in the previous forecast (reflecting stronger-than-expected momentum in the second half of 2020).
- Although recent vaccine approvals have raised hopes of a turnaround in the pandemic later this year, renewed waves and new variants of the virus pose concerns for the outlook.

### Distributional and sectoral impacts
- The severe collapse in 2020 has had acute adverse impacts on women, youth, the poor, the informally employed, and those who work in contact-intensive sectors.
- The strength of the recovery is projected to vary significantly across countries, depending on:
  - access to medical interventions,
  - effectiveness of policy support,
  - exposure to cross-country spillovers,
  - structural characteristics entering the crisis (Figure 1).

### Policy guidance and priorities
- Policy actions should ensure effective support until the recovery is firmly underway, with an emphasis on advancing key imperatives:
  - raising potential output,
  - ensuring participatory growth that benefits all,
  - accelerating the transition to lower carbon dependence.
- As noted in the October 2020 World Economic Outlook (WEO), a green investment push coupled with initially moderate but steadily rising carbon prices would yield needed emissions reductions while supporting the recovery from the pandemic recession.

### Multilateral cooperation and support for vulnerable countries
- Strong multilateral cooperation is required to bring the pandemic under control everywhere.
- Recommended international efforts include:
  - bolstering funding for the COVAX facility to accelerate access to vaccines for all countries,
  - ensuring universal distribution of vaccines,
  - facilitating access to therapeutics at affordable prices for all.
- Many countries, particularly low-income developing economies, entered the crisis with high debt that is set to rise further during the pandemic; the global community will need to continue working closely to ensure adequate access to international liquidity for these countries.
- Where sovereign debt is unsustainable, eligible countries should work with creditors to restructure their debt under the Common Framework agreed by the G20.

*World Economic Outlook Update, January 2021: Policy Support and Vaccines Expected to Lift Activity*

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## Content in this bundle

- **WEO Update January 2021**
  - [WEO Update January 2021 (XLSX)](/-/media/files/publications/weo/2021/update/january/english/data/weojan2021update.xlsx){rel="external" type="application/vnd.openxmlformats-officedocument.spreadsheetml.sheet"}
- **Full Report**
  - [Full Report (Markdown version)](/-/media/files/publications/weo/2021/update/january/english/text.pdf.md){rel="alternate" type="text/markdown"}
  - [Full Report (PDF)](/-/media/files/publications/weo/2021/update/january/english/text.pdf){rel="external" type="application/pdf"}

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## References

- [IMF Blog: A Race Between Vaccines and the Virus as Recoveries Diverge](https://blogs.imf.org/2021/01/26/a-race-between-vaccines-and-the-virus-as-recoveries-diverge/)
- [IMF Chief Economist Gita Gopinath](https://www.imf.org/en/videos/view/6227487318001)
- [https://www.imf.org/-/media/images/imf/publications/weo/2021/january/english/weoupdate-jan21-eng.png](https://www.imf.org/-/media/images/imf/publications/weo/2021/january/english/weoupdate-jan21-eng.png)
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_Source: https://www.imf.org/en/publications/weo/issues/2021/01/26/2021-world-economic-outlook-update_