COVID-19 vaccines to goose global growth in 2021, IMF predicts

The global economy, devastated in 2020 by shutdowns related to the coronavirus pandemic, is poised to make a major recovery this year as vaccines to control its spread reach the market, the International Monetary Fund said in its latest forecast released Tuesday morning.

The international financial agency now says the world’s economy will expand by 5.5% this year, following a 3.5% drop in 2020 that was the most severe since the end of World War II. The latest IMF projection is up from a 5.2% growth forecast issued just three months ago.

Despite major snags and imbalances in rolling out the COVID-19 vaccines, economists say the program will allow countries to ease economic shutdowns and roll back travel restrictions at an accelerated rate as the year progresses. Major stimulus programs passed by major economies such as the U.S., China and Japan also are forecast to increase growth rates globally.

Barring unforeseen setbacks, the IMF says the U.S. and the new Biden administration can expect growth of 5.1% in 2021, after a fall of 3.4% last year, while Europe’s 19 euro-zone countries will grow by 4.2%. China, the one major economy that managed to maintain growth of 2.3% in 2020, is projected to grow by a strong 8.1% this year.

Global trade levels, which plummeted 9.6% last year, are expected to rebound and rise by 8.1% this year.

The IMF forecast warned that the world is still not out of the woods economically as it seeks to recover from the devastating pandemic.

“Much depends on the outcome of this race between a mutating virus and vaccines and the ability of policies to provide effective support until the pandemic ends,” IMF chief economist Gita Gopinath said at a press briefing Tuesday, The Associated Press reported. “There remains tremendous uncertainty.”